Finance

Finance
(How to Stay Afloat!)
This part of the guide is split into three sections. First, the mundane aspects of getting yourself organised banking-wise, as well as a note on taxes.  Second, the spending guide, with advice on buying and tipping.  And lastly, the cost of living, which includes categories of major spending, and some ideas on saving money.
I Organising Your Accounts
Bank Accounts
While at MIT, you will definitely want a bank account with Fleet Boston. Why?
•    It gives you a way of getting dough out of cash machines, known as “ATM”s, which stands for Automatic Teller Machines
•    It gives you a credit card which doesn’t charge an extortionate fee for converting pounds into dollars
•    Many American websites, which you may use to get travel tickets, hardware or textbooks, simply do not accept credit cards with billing addresses outside the US.  If you get paid for anything or receive any cheques (“checks” in Yankee-speak) in dollars, you’ll need an American bank account to receive the funds. This is useful if you do UROP for pay.
A few MIT students have accounts in other banks, but none of these are as conducive for international dealings nor do they have as many ATMs situated in the Boston area. Given that you want a Fleet account, you should wait until you get to the US before setting one up – there is far too much hassle (as this first-timer learnt the hard way) trying to get things rolling from the other side of the pond.
Be warned of one thing in advance: American banks are terribly cut-throat on fees.  Fleet will try to charge you fees for anything and everything under the sun, and yet, make you put up with relatively terrible service compared to in the UK.  Tips to avoid getting ripped off include:
•    Asking to get a “free checking” account, a new deal which they introduced at the end of 2001, which means you don’t have to pay their customary flat fee of $5 a month.
•    Don’t go to the MIT branch of Fleet if you can.  Service can be abominable – imagine having to wait half an hour to have a check paid in. A Fleet branch in Boston, or further up Mass. Ave. towards Harvard, or at Kendall Square (on the east side of campus) or at the Galleria Shopping Centre are better bets.
•    Always get money from Fleet ATMs.  You may be charged a significant fee at other ATMs.
Getting Money Into America
Most of your money will come in via TT (telegraphic transfer) from your home bank account or from your parents’. However, accept that Fleet charges a ridiculous incoming TT fee (around $25 per transfer as of early 2002) on top of the outgoing fee (cheapest is £12 from Barclays, £20 from Natwest) so you’ll want to do your transfers in a few large lump sums. You might get away with just two transfers during the year.  In order to make a TT, your home bank will need to know your Fleet account number, exact account name, and the sort code.  Go along to the nearest Fleet branch to get details for such transfers. It can be a slight hassle, and at least one error was made (but later corrected) during your writer’s TTs, so don’t rely on receiving any money this way for at least two weeks after you open your account.
Therefore, it is a good idea to bring plenty of money in dollar-denominated travellers’ cheques.  The post office is the cheapest way to get both these and plain American cash – the commission was 2.5%.  Don’t take more than $1500 this way though – it is cheaper to do a TT for more than this amount.
The cheapest way of getting money into America is in cash, but there are some obvious risks and disadvantages.  Go down to the post office and get yourself a couple of hundred dollars to spend in the first week or so.  However, you might not want to be hanging around Kings’ Cross on the way to Gatwick with any more than that in your pocket…
One bit of advice – don’t leave transferring money to the last week before departure, as it might take longer than you think, and few things are worse than being stuck without a buck to your name.
Tax
It is very, very likely that you will not have to pay tax – as a British citizen, you are exempt from the first few thousand dollars of anything you earn.  If you are not a British citizen, then your country will probably have its own special tax situation with regard to the US, known as a tax treaty.
If you are entitled to tax returns, which you most probably are, then you will be able to reclaim some tax, which is levied at source, if you fill out their marathon system of forms before the end of the financial year, 15 April. These forms can be obtained from the MIT Student Centre.  It is a good idea to do this if you ever plan on coming back to the US, and to keep a copy of the paperwork.
II Out and About the Town
Buying things
Buying things in America is irritating.  If you see an item on the store shelf labelled ‘99¢’, this does not include tax, which brings the total to about $1.03.  If you pay in cash, you get a lovely jangling pocket full of nickels and dimes, which tend to build up into a small mountain in your wardrobe.  Paying by credit card, even for very small transactions, is more convenient, but takes much longer in the US than in Britain, for some unfathomable reason.
Name   
Denomination   
Picture
 
Cent or Penny   
1¢ = $0.01   
Nickel   
5¢   
Dime   
10¢   
Quarter   
25¢   
American coins
There are a few dollar coins floating around too. US bills come in denominations of $1, $5, $10, $20, $50 and $100, are all green and are exactly the same size, so it is easy to hand out the wrong bill to an unscrupulous person – be careful!
Tipping
Unlike Britain, tipping is ubiquitous in the US.  You are expected to always tip taxi drivers and waiters.  Standard tipping rate is 15%.  An easy way to calculate it is to lop one zero off the bill and add half again, e.g. for a $27 bill, the tip would be $2.70 + $1.35 or about $4.
Large groups are often given a standard service charge (usually 18%) in which case you are not expected to tip.  Be careful to eye the bill – sometimes the restaurant will leave a blank line for gratuity, but also include service charge, hoping to get a double whammy from you.
Oh, and the bill over here is called ‘the check’ over there.
 
III Cost of Living
Living in Boston is expensive. Contrary to popular belief, it is not a cheaper place to live in than Cambridge. Expect to spend nearly twice of what you would in Cambridge over the year.
Food
In Cambridge you can go to a Cafeteria, shop at Sainsbury’s or go out to eat.  The same options exist at MIT, but with important differences:
•    S-M (a.k.a. Cafeteria) is the MIT dining service.  Food is generally very greasy and overpriced.  A good meal costs around $5.  A better place to get lunch is one of the friendly food trucks.  On a rough estimate, close to 1,500 falafel and humous sandwiches were consumed by hungry CMI-ers in the first year.
•    Shop at Star Market and buy in bulk.  You’ll still be shocked by the prices here, but this is as cheap as it gets in Boston.  Even a loaf of bread costs between $1.50 and $3.  Delivery is $15, but it is quite possible to lug your purchases all the way back to campus without too much problem, really.
•    Eating out!  Although the first two options are much pricier than Cambridge, this last one is cheaper.  Although Boston has its pricier delis, there are many places to get good nosh on the cheap, often for less than $6 for a main course.  The only reason everyone doesn’t eat out almost every day is that they’re too busy.
Rent
Accommodation costs are set by your living group, and vary quite a bit from dorm to dorm – if your budget is tight for the year, then take the costs into account when deciding on your living group, as the amount you pay for your accommodation doesn’t seem to relate in any way to its quality anyway.  Expect to pay between $4,000 and $6000 for rent during the year.  Once you know your living group, you can look up the exact costs on web.mit.edu.
Entertainment
Whatever you’re into, it is guaranteed that big names will be in Boston almost every week.  Tickets vary in price from almost nothing (some people saw StarSailor for $3.50, and the Boston Symphony has free student tickets) to very dear ($100 to see Britney), so budget some money aside if you plan to concert-go.
Hardware
Although everyday goods from pasta to detergent are significantly more expensive in Boston, you’ll find various bits of electronics and other hardware a lot cheaper.  Clothes are also cheaper.  A rule of thumb is that the price in pounds in the UK is roughly the same as the price in dollars in the US.  For even better discounts, shop online at places like ebay.com or ubid.com.
I wouldn’t worry too much about the cost of furbishing your room with carpets, furniture, answering phone, fridge, speakers, etc.  Although it is prohibitively expensive to carry these home, you should have no problem selling them to other students at the end of the year.  (I spent $260 at the beginning of the year, and recouped $220 at the end.)
Medical
MIT extended medical insurance, which we were all recommended to get, costs around $750 for the year.  Beware though – this does not include many consultations, which can get expensive fast.  This poor chap had to pay $150 to get his wisdom teeth out, despite the fact that the operation itself was covered. A certain CMI student saved a lot of money using private insurance, which was apparently a lot of paperwork hassle, but much, much cheaper. You could do a search for these on the web.
 
The Bottom Line
OK, so how much could you possibly spend in a year? The absolute bottom line?  Expect to spend between $10,000 and $12,000 this year.  But rumour has it that a couple of shopaholic ladies on the trip managed to dispose of nearly $17,000 in 2001-2002, so this is by no means a maximum. Shocking though it is, you really will spend that much.  Plus, the cheap hardware prices make it very tempting to spend a little extra on some electronic goodies – this tech-savvy MIT Brit poured $1,200 into a camera, laptop and a CD burner.
Little wonder that consumer spending is touted as the bastion of the American economy these days.