By Assunta Ng
Northwest Asian Weekly
My young Asian friend got accepted into Yale University’s MBA program. That’s the good part. The bad news is he can’t pay for it. The program costs over $100,000 a year.
“My parents are not helping me,” he said. “They said they already paid for [my] undergraduate degree.” It sounds fair. He was already considering taking out a couple of loans to cover his Yale degree. Loans or credit cards are the first thing millenials will consider when they are short on cash. What I don’t understand is that my friend worked five years at a major financial institution and yet, he had not saved enough to pay for his advanced education.
Sure, it’s exciting and glamorous to get into a prestigious school like Yale. What an adventure it must be to study on the East Coast and hang around some of the smartest and brightest in the country! But is such a high-cost degree worth the investment?
Financial guru Suze Orman wouldn’t recommend it. A graduate from the University of Illinois at Urbana–Champaign, she argued that she didn’t graduate from an Ivy League school, yet still became successful — building a multi-million dollar empire as talk-show host, author, and motivational speaker.
I wouldn’t recommend it either. My whole life, I have been uncomfortable with being in debt (except for mortgages). Could this be a generational issue? Are young people today more spoiled than baby boomers? They know they can count on their parents and grandparents for a financial bailout. As for me, if I didn’t make it in America, I’d be doomed with no options, except returning home to Hong Kong, shaming my parents, and breaking their hearts.
Financial highs and lows
I never considered buying my first house at the age of 25, together with my husband, as an achievement until my peers bragged about becoming homeowners. Being poor in my childhood and college days, I realized early that I couldn’t afford to indulge in a lavish lifestyle.
You might assume that I have never experienced any financial disasters. But I did, many times in my life, due to bad decisions. The funny thing is, I never felt desperate, anxious, or unhappy in those moments.
In 1997, a huge financial loss struck us, but it didn’t cause any sleepless nights.
The old Kokusai theater building (now the Northwest Asian Weekly office) we bought suddenly collapsed after an earthquake months prior. At the time, we had only liability insurance, not full coverage, because the old building had little value to be insured for. The whole incident cost us over $150,000 for demolition and cleanup. Was I devastated? No. My philosophy is, I am the master of my life, not money. The good thing was, I discovered that I had many banker friends who offered me loans. Of course, we paid them back. The collapse was a blessing in disguise — it forced us to plan a new building.
Poverty has taught me to be efficient and frugal, lessons learned from my mother.
To bring in income, my mother leased a big apartment and subleased it to four separate tenants. Being a landlord was a lot of work for her, but it also covered our own rent. I never realized how tight money was in my family because there was always food on the table and a roof over our heads.
Mom couldn’t afford to give me an allowance, but she would give me some lunch money. It was difficult to get it from her though. I had to remind her several times and she always said, “I owe you. OK, later?”
If I needed money for school supplies, I simply skipped lunch or ate a roll, instead of having a rice box. And Lunar New Year was always a financial blessing. I would receive countless lucky red envelopes from relatives and friends, which lasted a long time.
To pay for college, I worked three jobs one summer. After paying tuition and rent for my dorm at the University of Washington my first year, I had only $15 in my bank account. I was overjoyed when I found that I still had money left to buy toothpaste and candy! Did I ask my friends to give me a loan for security purposes? Never. Being a full-time student, I didn’t have much time to spend money anyway. The only time I cried was when I was unable to find my first summer job after walking for two weeks with holes in my shoes.
I looked back at my ‘poverty’ days as high points in my life because it strengthened my determination and perseverance.
Consequences of not giving
Today, young people have a different mindset about finance. This could be a generational issue. Most Americans don’t practice saving. Just look at their credit card debt; it’s absurd. Most have confessed that they don’t have an emergency fund.
While I advocate “Save, save, save,” I never imply that you have to be stingy with yourself and your friends. If you are financially established, you should spend money to help the economy. If you are old and successful, you don’t have to save much or invest further to multiply your wealth. How much longer are you able to enjoy it? And please don’t even think about giving wealth to your grown children. A big inheritance would not motivate them to stand up on their own.
What is wise is to develop a plan to give money away periodically to help the less fortunate. There’s a consequence if you can afford to give and don’t. You may not realize it right away, but everything happens for a reason.
I remember a guy who was asked to donate $30 at a community fundraising event for Katrina victims in 2006, at the House of Hong. When several friends urged him to do so, he flatly said no. The following week, he lost $9,000 in one night, gambling. None of his friends had any sympathy for him. Some said he deserved it. Had he donated that $30, he might have escaped the $9,000 loss.
There isn’t always a direct cause and effect, but an unexplainable correlation remains. We shouldn’t ignore it. It is giving us subtle messages to wake up— and do the right thing.
Many young people have complained that it’s tough to save money these days, with rent and the cost of living being so high in the greater Seattle area. But there are ways to save money if you are determined to be financially independent. Here are some suggestions.
- No lattes. One young staff member enjoys a Starbucks latte a few times a week. That’s at least $10 a week, and hundreds of dollars a year. And if you drink and smoke, that’s costly, too. Do you have expensive habits you can eliminate?
- No expensive hobbies. An example of an expensive hobby is skiing. In addition to the pricey equipment, it costs at least a couple hundred dollars to travel out of town and to pay for facilities. Even though I am not strapped for money, I have enjoyed many good hobbies that cost nothing, like strolling in parks, hiking, and checking out books and movies from the library.
- Stop online shopping as one can spend too much surfing through the internet. Avoid famous brands. My former classmate wears expensive St. John clothes, while I prefer finding sales and deals. I rather buy 20 nice outfits with no-brand name than one outfit from St. John. Since I changed my wardrobe from dresses to pants a decade ago, I have saved a lot of money. Dresses cost double what pants and tops do. For the past 10 years, I have not bought a single dress. With pants, you can mix and match with various tops, thus creating many styles.
- Invest in real estate. Learn from Asian Americans who invest in real estate by buying their first home before investing in rental homes and apartments. Getting fixer-uppers at low prices then turning them into valuable properties to sell, has been the strategy of many real estate tycoons in our area. As James Wong, chairman of the Solterra development company, said, “Time is on your side in real estate [investing.]” The longer you hold on, the more money you make. It really is better than putting your money in a bank CD.
- Get a roommate. Living alone in an apartment or house is never economically feasible. It makes a big financial difference if you can share living expenses with your friends or loved ones.
- Have kids later. If my husband and I started a family right after getting married, it would have been a financial drain.
- No fancy apartments. Rent eats up a big chunk of your salary. Thanks to subsidized housing ($250 a month) from the University of Washington for married student couples, we were able to save money to buy our first home. My husband was a graduate student working as a research assistant, while I was a school teacher. After working two years, I was able to save $11,000 (in the 1970s) for a down payment on our house. Although we were thrifty as a young couple, we never felt deprived. We took vacations once a year, enjoyed going to movies and dining out. Of course, we always patronized affordable restaurants. One of them was a $1 Sunday breakfast with an egg, sausage, and coffee in the University District. Also, we entertained regularly by inviting friends over for dinner.
Save, even if you don’t have any specific goals in mind. The balance between making, keeping, and spending money is important to our well-being. To have a sense of security, you have to strike a balance between what you desire and what you have to live your best life.
As for my friend heading off to Yale, I dare you, pal, to prove this baby boomer wrong. If this serves as a motivating force, more power to you. Understand that you are special to be chosen. In two years, come back and share how you blazed a trail and please say to me, “I told you so.”
Assunta Ng can be reached at email@example.com.