I have a brand new business venture about to launch in two days - the result of over a year of work, and the reason why my blog posts have been so sporadic! LOL:



Exciting details to follow soon - gotta finish tweaking the site!


[ 29 November, 2008 ] • [ Hugh ] •[ Leave comment - 0 ] •[ Link to this article ]

An observant viewer just posted the following query on my video highlighting the story of how our family became debt-free (not including our mortgage) to the tune of almost $55,000 in only 9 months:

The numbers don't add up, $55k in 9 months is $6k a month, that's a lot more than cutting back on starbucks/cable etc.

One of the reasons (in my opinion) that Dave (e.g. Dave Ramsey) asks about household income / what did you sell, is that it inspires others to make the bigger sacrifices to pay things off (e.g. sell that awesome car, etc.).

So if you care to share, what did you sell?

Good job and great video, loved it.

It's true that Starbucks and Cable TV cuts alone won't save $6k per month, but i didn't think that explaining the difference between whole life and term insurance would've made for a particularly interesting video! We actually didn't sell anything like cars or real estate, but we did benefit from consolidating assets and paring down other financial vehicles like insurance products.

Here are some of the other factors that went into our massive debt-elimination program:

Consolidating savings/investing accounts - we had monthly withdrawals of about $200 going into a Morgan Stanley money market account, but never ended up actually investing the money - things would accumulate a bit, then we'd have to withdraw down to pay for this credit card bill or that late fee. By stopping those silly monthly payments, we were able to focus on a more simplified income/outgo overview. We closed the $2000 money market that was sitting around at Morgan Stanley and used that money to pay down our debts instead.

Switching from whole life insurance to term insurance - this was actually a biggie. Whole life is supposed to add an 'investment' package of sorts to your life insurance, adding so-called 'value' over time. Dave Ramsey explains that once you factor in all the policy's fees, the actual rate of return on the money is pretty horrible - worse than regular bank savings account, if i recall correctly. Closing our whole life enabled us to collect a lump sum of $12,000, as well as saving over $100 per month for the cost of the insurance itself.

Going GEICO - yes, i hate to sound like that silly green gecko, but switching auto insurance policies actually saved us a bundle! Upon reviewing our car insurance packages, i saw that we were pretty bloated with extra 'goodies' - by paring down to the bare minimum for coverage, we were able to save about $300/month.

Temporarily stopping retirement contributions - for 9 months, i halted my contributions to my 403B retirement plan at Curtis. That saved about $400 per month - once we cleared our credit card/home equity loan debts, i immediately reinstated the 403B.

Let's see - that brings the monthly savings to $200+100+300+400=$1000. Multiply that by 9 months = $9000. Add the $2000 from the extra money market at Morgan Stanley and the $12,000 from the whole life insurance and the total debt-attack fund so far comes to $23,000. Add in other major budget saving factors like the ones i described in the video and others like grocery savings and the cancellation of other subscriptions (such as my beloved Audible.com and my own membership at a premium gym), and i think you could add another $1000/month to the pie, bringing the total to $32,000.

The remainder came from some terrific bonuses from my wife's job (she's a physician) and some amazing influxes of work for me (extra recording projects, concerts, and work for the Philadelphia Orchestra). It seems to be really true that once you start 'getting smart' with your money, then more money tends to flow in much more easily.

Even without the hefty work bonuses, it's easy to see how we could've knocked out the full $55K in just under 2 years (as we originally planned, by the way). Hope these extra details are helpful as you plan your own exit strategy from the debt-mines!

Just for fun, here's the video that the above commenter was referring to one more time (it aired on the "Dave Ramsey" TV show, btw) :




[ 04 June, 2008 ] • [ Hugh ] •[ 4 Comments ] •[ Link to this article ]

So sorry for the delay in updating posts - even with the school year finished at Curtis, things have been incredibly busy for me!  The blessing and the bane of the working musician is that we are conditioned to grab work at every opportunity, given the transient nature of our art coupled with the uncertainty of never knowing for sure when that next job offer will appear.  When things load up, boy - they really load up!

One task for this new website that i haven't been able to get around to earnestly has been to link up with like-minded blogs and web articles dealing with finances for musicians and sundry business aspects of our art.  Here's a short list of some interesting links that merit addition to your RSS blog reader:

• The Collaborative Piano Blog - this is one of the very finest classical music blogs out there, written by Dr. Chris Foley.  He covers the gamut of artistic and practical issues for pianists who love to collaborate with others - be sure to check out his articles on collaborative piano career options, his fascinating poll on rehearsal/coaching rates (in US $), as well as his article on Musicians as Entrepreneurs (which subsequently links to two terrific articles - one by Kerry Miller of Business Week, the other by Valerie Kampmeier from Free2Create).
• "M is for Money, N is for Ninth" - this is a terrific article by Joe Queenan from the music section of the U.K. Guardian that gives a neat overview of the financial travails of history's greatest classical musicians.  Sobering, yet amusing, to say the least!
• "The Business Side of Classical Music" - this is a video interview with Charlotte Lee, an artist manager with IMG (we had an opportunity to meet a few times several years ago when she was working with Lang Lang - i wonder if she remembers me!).  She gives some terrific insights into what's involved with working from the management side of the business.  Several other video clips by Charlotte are available if you look along the left menu bar, with topics ranging from starting a career in the arts to aspects involved with maintaining a long life in the music business.
• ArtistHouseMusic.org - the above clip, btw, is hosted by ArtistHouseMusic.org, a terrific informational resource for working musicians, with knowledge bases and video tutorials covering marketing, production, legal issues, education, careers, and many, many more music-related subjects.  You can even find a video master class series on jazz! 
• ImproveYourMusic.com - this site is mainly geared towards rock and pop bands, but i'm convinced that classical musicians can gain a lot of invaluable information from our artistic brethren in the more 'mainstream' genres.  Some helpful articles include the series on "100 ways to promote your music", "Selling your music online", and "Raising Finance for an Album" (which gives a fascinating example of 'micro-financing' through sites like slicethepie.com - believe it or not, there are already classical musicians represented there too!)
• Other micro-financing music sites include www.tuneyourworld.com (otherwise known as Calabash) and SellABand.com - the idea with micro-financing (a la www.kiva.org) is to enable musicians to enlist the investment of fans in small amounts to help produce their music. 
• MusicTeachersHelper.com - in addition to providing a terrific web-based music studio management system, MusicTeachersHelper.com also provides an immensely informative blog on the business of teaching music lesson privately.  They've enlisted a great roster of blog authors who contribute regularly, covering recent subjects such as "Helpful Hints on Expanding your Studio" and "Economic woes posing challenges to private music teachers".
• Careers in Music - this site is provided by MENC: The National Association for Music Education, and gives a comprehensive list in 16 categories of music careers, ranging from Music Education to Performing Arts Medicine and Music Technology.  Salary ranges, prerequisite social/knowledge/skills and recommended educational training suggestions are listed for each category.  A terrific resource for younger students/professionals looking for viable music career options!
• Bob Baker's Indie Music Promotion Blog - this gentleman has been blogging since 2004, giving sagely advice and news to indie musicians on all aspects of marketing and self-promotion. 
• The Muse's Muse - a mega-resource for songwriters, both beginners and professionals.  It's a busy site, with everything ranging from artist spotlights to music software resources, message boards, insider news and toolkits for the aspiring muse. 

 

Whew!  See what a little bit of surfing will turn up?  I'll be sure to post more links as i run across them - send me a shout out if you have some recommendations of your own!

[ 03 June, 2008 ] • [ Hugh ] •[ Leave comment - 0 ] •[ Link to this article ]

A reader posted the following question a few days ago, regarding Dave Ramsey's "Pinnacle Point" where one achieves financial freedom from investments that deliver higher returns than expenses:

 

"I'm enjoying reading your financial stories and finding some valuable resources on your site--very inspiring to a musician in similar circumstances-thanks!  I have a question about something you mention above from Dave Ramsey: "That point gets achieved when the interest from your mutual funds exceeds your expenses."  I've never experienced nor do I understand the concept of "interest" on mutual funds; only swelling or shrinking with the rise and fall of the market and stock contained in the fund (as you go on to point out.)  Not having read Dave Ramsey's book from which you get this quote, could he possibly have meant "dividends" from stock as opposed to "interest" as something exceeding expenses in order to reference something tangible to offset expenses?"

 

Being in virtually every sense a money newbie (with a strong determination to learn, mind you), i re-phrased the question to my financial adviser as follows:

 

"Can you help me better understand how compounding works in the case of mutual funds/stocks which go up and down in value, as opposed to compounding a 'stable' savings account with a fixed interest rate?"

 

My financial adviser took a look at this and came back with the following response:

 

"Your reader's questions has to do with verbage rather then concept of compounding rates of return.  First let's cleanup the vernacular.  Interest is what is paid by a debtor (bank to customer, customer to bank).  It can be paid as the interest on the savings account.  It can be paid as the interest on a car loan.  It can be interest on a bond to a company.  Capital appreciation or capital depreciation is the value of something going up or down.  Your home was purchased for X, if you sold it for Y then the asset appreciated.  Stocks and mutual funds work the same.  Some stocks routinely pay dividends.  This is usually referred to as dividend interest.  Mutual funds can be made of of a variety of stocks, bonds, interest bearing devices and capital appreciating securities depending on what they are trying to achieve.  But I think your reader is missing the point of compounding interest.

"Here's how compounding works:  Supposed you made a 10% rate of return on $1,000 for 5 years.  You wouldn't say, "Well 10% for 5 years is 50%.  Therefore I have $1,000 times 150% = $1,500.  You would have to take $1,000  (110%) (110%) (110%) (110%) (110%) = $1,610.50.  This of course is more exaggerated the higher the rate of return and the longer the time period.  The formula for figuring out simple return is:

principle * [(period held) X (rate of return) ] + the principle. 

"In computing compounded return we take the [(1+ rate of return) to the power of period held] times the principle.  Compounding has exponential growth the other has straight line.

"Regardless whether it is interest or capital gains doesn't matter.  You (and Dave) are really talking about compounding rates of return (not compounding interest).

"On a further point...  You mention stable savings account versus ups and downs of mutual funds.  It is extremely vital for long term returns to try to smooth portfolio returns by managing risk.  Truly the difference in long term compounding.  One of the things I think is fundamentally wrong with some quotes that Dave and lots of people make is assuming a 10% average rate of return is the same as a 10% annualized compounded rate of return.  VERY VERY VERY VERY Different. 

"For example if you have a 50% loss, then earn 20% a year for 4 years, then my average annual return comes out to 6%.  But look at this comparison of returns:

Starting at $100,000:

example of 6% average returns	straight 6% interest
Year end return	Year end return
$50,000 (50% loss)	$106,000 (6% interest)
$60,000  (20% gain)	$112,360 (6% interest)
$72,000   (20% gain)	$119,102 (6% interest)
$86,400 (20% gain)	$126,248 (6% interest)
$103,680 (20% gain)	$133,823 (6% interest)

"For fun repeat this process if you'd like.  But if you take it out 50 years... It gets ugly.  Smoothing volatility is extremely important.  I don't think Kyosaki or Dave Ramsey take that deep enough.  In Kyosaki's examples it will kill you.  In Dave's example, it just makes some of his calculations unrealistic.

From 1926-2000 (albeit a nice ending point)

Stocks annualized an 11.04% return.  If you put $1 in 1926, you got $2,582 in 2000, but had swings from -68% to 163% in any given year.

Short-Term investments (like T bills or cash) annualized at 3.8% which turned your $1 to $17, with swings from 0% to 15%.  Which is better?"

 

Did your head hurt from reading all of that?  Yes, mine did too - i guess the main point to come away with is the fact that there is no "magic cash cow".  As much as i love Dave Ramsey's methods for getting out of debt, it seems that his mutual-fund-only investment recommendations are too optimistic to expect a consistent 12% compounded rate of return.  (sigh...i remember when i was able to sock away tons of CD's at interest rates of 10-12% - that helped pay for my wedding and honeymoon!)

In musicians' terms, while it would be nice to be a superstar soloist and command $50,000 fees per concert, for those of us in the 'real world' we tend to earn a living through a variety of methods in the following order of descending stability:

• teaching students (very stable)
• playing concerts (not as stable)
• selling CD's (pretty unstable)

The more i read up on finance, the more it looks like investing works pretty much the same way - some things work more steadily than others, and it's better to try to have a variety of investment vehicles than to stick everything into one basket.  Don't get me wrong, i still have every intention on maintaining a steady habit of monthly deposits into my kids' 529 plans and my own mutual funds, but i'll be looking at them with a slightly more jaded eye and (hopefully) more realistic expectations for their future performance.  Now to work on that collaborative pianist cloning patent...

[ 02 May, 2008 ] • [ Hugh ] •[ Leave comment - 0 ] •[ Link to this article ]

As if Providence wanted to back up yesterday's article on "10 Basic Working Tips for Musicians", here's an email i just received, sharing some wonderful news about a last-minute Carnegie Hall recital debut by an exceptional violinist (and Curtis grad) Lily Francis:

 

 

"Hello All!

We have some exciting news to share with you.

Just yesterday, Lily received a call from Carnegie Hall asking if she would fill in for a canceled Carnegie Hall Debut recital, by giving her own Carnegie Hall Debut Recital this Friday! She said, the only thing you can say in this situation...."Yes!"

Here are the particulars:

Lily will be making her Carnegie Hall debut performing a solo recital Friday evening, May 2 at 7:30 PM in Weil Recital Hall. Tickets may be purchased at: http://www.carnegiehall.org/article/box_office/events/evt_13244.html?selecteddate=05022008

The program, also featuring Andrei Baumann, piano, will include :

TELEMANN

Fantasia No. 7 in E-flat Major

    PROKOFIEV

Violin Sonata No. 1

BRAHMS

Violin Sonata No. 1 in G Major, Op. 78

KREISLER

Preghiera

KREISLER

Liebesleid

KREISLER

Schön Rosmarin

I know its last minute, but join us if you can!"

Nice to see the power of "YES" in action!  Congratulations, Lily and good luck on your recital!

[ 01 May, 2008 ] • [ Hugh ] •[ Leave comment - 0 ] •[ Link to this article ]

Welcome to the first post of my new blog, "The Prosperous Musician" - yes, yes, i know, a somewhat cumbersome name, but hey - richmusician.com, wealthymusician.com, and several others were already taken (and not really being used, sadly) - starvingartist.com goes to an online art gallery, and starvingmusician.com goes to a chain of music stores on the west coast.

So who am i?

My name is Hugh Sung - i'm a classical pianist on the faculty of The Curtis Institute of Music with a passion for technology. That passion, unfortunately, led me to make a lot of very expensive purchasing decisions to fuel my craving for the latest and greatest toys. Despite making a decent faculty salary and being married to a wonderful physician wife, we could never make ends meet, and for years we both felt like we were on a fiscal treadmill with absolutely no traction and a mountain of looming debts.

Early in 2007, my pastor introduced me to a crazy radio guy named Dave Ramsey, along with his book, "The Total Money Makeover". Dave's principles are simple: get completely out of debt, stay away from credit, build up a sound financial foundation step by step and save/invest for the long term. Something about this message - the delivery? the simplicity? the brute honesty? - struck a resounding chord (you can read about my coming to terms with the reality of my fiscal situation here). The result was that in just 9 months, we got "gazelle intense" and paid off almost $55,000 in credit card and home equity loan debt!



This has been a tremendous learning experience for me and my family, and in many respects we're still at the very beginning of a new financial journey. We aren't rich (yet), but i'm hoping that this blog will help to chronicle my explorations into breaking the old clichés that classical musicians are doomed to "starve" for their art. To start, i'd like to encourage you to take a look at the Amazon Book Carousel along the left column which features 10 recommended books on finance and business topics that i found incredibly helpful and relevant for musicians. Other recommended reads (like "Making Music in Looking Glass Land" by Ellen Highstein - not currently available on Amazon, but definitely worth tracking down - you can order it directly from Concert Artists Guild's website publications page) will be featured along the side bar and in blog posts from time to time.

If you're a musician blogging about finance and the business of music, i'd love to hear from you and add you to my links column!

Welcome, and i hope you enjoy this site!

tags: musician,, classical, music,, finance,, business,, Dave, Ramsey,, debt,, money


[ 27 April, 2008 ] • [ Hugh ] •[ 6 Comments ] •[ Link to this article ]