The Frugal Duchess of South Beach

— Sharon Harvey Rosenberg is a freelance reporter for Florida Trend and columnist for the Miami Herald. Read her blog The Frugal Duchess.

Introduction: The Dream House at a Yard Sale

I found my Dream House at a yard sale on Surprise Lake, a Miami Beach neighborhood that shares its name with a body of water that feeds into the Atlantic Ocean. The house — a two-story Mediterranean structure with a double-lot backyard — was a good bargain, especially given the location: just 30 blocks north of South Beach, an international playground filled with trendy boutiques, nightclubs and cafes.

South Beach’s all-night party crowd of supermodels, celebrities and drag queens was just going to sleep when I first toured that Dream House on a Sunday morning during a yard sale in the mid-1990s. The homeowners were grandparents who were ready to move into a smaller home after many happy years in their 3,600-square-foot Mediterranean home. My husband and I — young parents with pre-schoolers — chatted with the sellers, discovered a few mutual connections and looked over the yard sale merchandise. And for just a few dollars, we purchased terracotta plant containers and several potted plants, including a robust aloe.

I was pleased with our purchases. Such yard sale expeditions are part of my thrifty-but-luxurious life and my bargain-hunting experiences have provided plenty of material for my Miami Herald newspaper column and blog posts, where I am Sharon Harvey Rosenberg, aka “The Frugal Duchess.”

But as a bargain hunter, I missed the deal of the decade at that yard sale. In hindsight, my husband and I should have skipped the plants and bought the yard. The asking price — about $425,000 — was too rich for our budget, but we should have begged, borrowed and saved to buy that house. That’s because at $425,000, the Dream House was really a Dream Investment.

Consider how the house has sold since that yard sale:

• June of 2000: $675,000. Sold.
• June of 2005: $1.32 million. Sold.
• November 2006: $2 million. Sold.
• March 2007: $2.6 million. Listed Sale Price.

Clearly, we missed a great opportunity in the red-hot South Beach housing market. And it’s not just a Miami thing. Double-digit gains in home prices from the mid-1990s through 2006 have locked many consumers — teachers, health care workers, police officers and store clerks — out of the home market or prompted home buyers to borrow far more than they can comfortably afford.

And while consumer debt has spiked to an all-time high, the rate of personal savings has dropped to the lowest levels since 1933. That financial crunch is also felt by consumers from the Gen Y set, (ages 25 to 34) to baby boomers, ages 50 and up. Likewise, in my neighborhood, one older baby boomer uses the term “Splitting the Penny,” to describe the challenge of taking care of day-to-day family expenses, while trying to save for long-term goals such as retirement and college educations for children and grandchildren.

These days, I’ve been splitting a lot of pennies as I save for my $2.6 million Dream House, while maintaining a thrifty, but upscale lifestyle on Miami Beach. I know that if I keep saving, I’ll buy that yard sale house one day. Saving runs in my genes.

I come from generations of hard-working home owners and big-time savers. Over the years, I’ve watched as my mom and dad worked extra jobs and saved for a series of successively larger homes, including a large oceanfront condo in Central Florida, while sending four children to college. What’s more, my great aunts, uncles, cousins and grandparents have owned property from the Deep South to the Northeast region of the United States. And through thrifty living, my younger siblings own homes in Pittsburgh, Washington, DC and Orlando.

We’re a family of homeowners.

So why is an economy-sized writer like me living in an ocean-view rental apartment in a big-ticket neighborhood filled with mansions, South Beach celebrities and late model cars? Quite simply, I’m taking frugal lessons from The (SouthBeach) Millionaire(s) Next Door. And the authors of the bestselling book about the thrifty habits of millionaires are right: Many — albeit clearly not all — of the wealthy are well-schooled in the art of luxury living for less. My life in the palm tree shade of wealth and privilege has taught me to buy designer clothes at thrift store prices, organic produce through a discount food coop and to vacation at top-ranked resorts at budget-motel prices.

These frugal lessons continue the financial education I acquired in my parent’s home where fabulous living on a thrifty budget was the family code. In that spirit of anything is possible, my mother smiles encouragingly when she hears me talk about my Dream House. Her advice: work, save and pray.

And indeed, my Mediterranean Mansion represents many things: my prayers, my financial strategies, my greatest disappointments and my highest aspirations. This is the story about what my Dream House — and other homes — have taught me about fine living, finance and faith.

Chapter One: The View from My Porch

Almost everyday from the seventh-floor balcony of my rental apartment, I study the main object of my affection. It’s like high school all over again. But instead of crushing on the cutest boy in my chemistry class, I am crushing on a tall Mediterranean with a clay tile roof. I love that house.

From my porch, I see very little of the big Dream House on the corner. The property is surrounded by a concrete wall, dense bushes and palm trees that shield the 11,000-square-foot lot from prying eyes.

Fortunately, my balcony also offers a broad view of the Atlantic Ocean. Sitting on a cast iron chair — a hand-me-down from my friend Caroline — I watch storm clouds dance over South Beach; I trace the skyline of famous Miami Beach hotels; and late in the afternoon, I follow the progress of large cruise ships in route to Caribbean ports. Clearly, I live in paradise.

As I relax on the porch with a home-made café latte or a tall glass of mint tea — cheaper and tastier than the Starbucks version — I feel so Southern. And living in Miami, I am truly in one of the most Southern points in the continental U.S. Finally, after living all over the Northeast seaboard, I’ve come back home to the South.

My family tree is rooted in the South, where towns like Macon, Georgia and King George, Virginia are part of our family folk tales. As the descendents of slaves and sharecroppers, our lives are anchored to the South like an old land deed.

In my childhood, the South was as vivid as a mural on the wall or the mobile dangling over my crib. It was also the summer breeze from an open window, lifting and playing in the yellow eyelet curtains that hung in the kitchen. You couldn’t see it and you couldn’t touch it, but the South — the Good, the Bad & the Ugly — is our family ghost.

I’ve carried the South around in my luggage during my travels as a young urban professional. You could track my life and career by following the Amtrak route of the East Coast: Philadelphia, D.C., Pittsburgh, New York and, finally, Miami. And like a railroad drifter, I’ve had several jobs: television producer, shoe model, waitress, fact checker, financial writer, celebrity stalker, newspaper/magazine columnist and personal finance blogger.

The nomadic life of a journalist has taken a heavy toll on my finances. Obsessed with meeting deadlines and acquiring prestigious bylines, I often neglected my financial health.

How bad have I been? Consider a past battle between my dirty laundry and a pressing deadline. Faced with a lack of time and a lack of clean clothes, I once took a very expensive route. Why waste hours and hours in a coin-operated laundry room, when I could buy ready-to-wear replacements in less time? That’s what I asked myself one day when I was in my early 20s. And in an Olympic caliber performance, I jumped over my clothes hamper as if it were a mere hurdle in a race and I sprinted to purchase a new wardrobe designed to last until I had the time and energy to face my dirty clothes. Here’s the score card:

Dirty Laundry versus New Clothes

I justified the mini-shopping spree — which I could not afford — by telling myself a series of lies and half-truths about my behavior and motives.

Top 10 Lies I Tell Myself
1. This purchase will pay for itself.
2. Sometimes, girl, you have to spend money to save money.
3. I’ll work overtime to pay for it.
4. I’ll save double next month.
5. It’s only money. How can you put a price tag on personal freedom and expression?
6. I’m having fun; don’t spoil the moment by looking at the bill.
7. I’ll be so rich by the time the payment is due.
8. It’s a long-term investment.
9. I’m not spoiled. I just need it now!
10. This will never go out of style.

It’s not my parents’ fault that I became a spendthrift. They raised me with practical and traditional values about money and work. And my parents backed up their verbal messages with hard work. For instance, during the normal work week, my father taught elementary school, but at night he worked at a high-end restaurant, a supper club, a small boutique and for a while, he had even worked at the Philadelphia Docks where he unloaded cargo from ships in late evening and pre-dawn hours.

What’s more, I believed my parents when they preached: “Money doesn’t grow on trees.” But I also heard the secret messages that danced through our lives. And even as a little girl I tuned into an odd frequency of fantasy and wishful thinking. Sure, money came from hard work, but money also appeared like magic. In fact, I had seen evidence of Magic Money in my parents’ lives.

For example, when I was seven years old, my father won the grand prize in a Knights of Columbus sweepstakes. After teaching all day and lifting heavy restaurant trays at night, my dad was tired and gave in easily when a fellow waiter pressed him to buy the last ticket in a raffle book.

After signing the stub, my Dad quickly forgot about the sweepstakes until a telegram announced that my parents had won a three-month trip around the world — an extravagant package during the mid-1960s. My parents — who had taken my brother Ben and me to see the 1964 New York World’s Fair — were quite tempted by the idea of a summer world tour. But reality set in before they packed their bags. First, they were reluctant to give up the extra income earned by teaching summer school for the Philadelphia School District. Second, there was the high cost of live-in childcare for me and my siblings; and third, my parents realized that the three-month tour would involve additional traveling expenses that would take a big bite out of the new home that they were building in South Jersey. And with the closing date less than a year away, they were worried about the settlement costs related to their dream home. Ultimately, my parents opted to take the cash substitute for the grand prize. It was a prudent decision based on thrifty principals. But that’s not what I told my classmates during a show-and-tell presentation.

“My mom and dad won thousands and thousands of dollars in raffle and that’s how we’re going to pay for our new house,” I announced to the class.

Listening to that tale, the teacher smiled and I could tell that she thought I had made the whole thing up. But it didn’t matter to me. I knew the truth: Money didn’t grow on trees, but if you wished hard enough, money appeared like magic.

It took me awhile to stop believing that some fairy, angel or magical godmother would sprinkle my bank account with pixie dust or leave a stack of gold bricks under my pillow while I spent the night dreaming. I wish that I could tell you that I gave up such fantasies during my twenties. But here’s the truth: I didn’t find my brain until I was 30. And in fact, if I could write off any decade in my life, I would probably write-off my 20s. At 18, I should have just taken a 12-year-age deficit, re-financed my youth and then fast-forwarded to 31. That’s when I became smarter about money.

But if I had not been so stupid about money (and other things) at 20, I would not have been wiser now. Here are five things from my 20s that I no longer do:

1. I no longer straighten my hair with expensive chemically-induced salon treatments that cost about $3,000 a year, plus interest because I usually used plastic for salon visits.

The worst part: I even paid a fortune for straight hair when I had no groceries.

Even Worse: I straightened my hair because I had a bad self-image. (Straightened hair is fine, if you just like the look. But that wasn’t my story.) A better self image has saved me a ton of money.

2. I’ve nixed the weekly manicures. I have paid $500 to $1,500 annually for a service that would have cost about $3 a year based on the price of a bottle of nail enamel. I should have put that money in a 401k plan. It’s like this: Nails break, paint chips, but money appreciates!

3. Credit card meals: Hey, I’m 49 and I still have indigestion from all those Manhattan meals from the 1980s. I’m still chewing plastic and I have magnetic strips caught in my gums. Painful!

4. Buy One-Get Two (in every color!). This is not a joke. One day, in New York, I went to every Ann Taylor in Manhattan — from the Upper West Side to Wall Street. I hunted down a shirt on sale. Found the shirt; found the sale; found every color.

5. Shopping while hungry, angry, depressed, rejected or in Paris with no money.

I think a lot about past spending trips and expensive restaurant meals as I sit on the balcony of my rental apartment located on one of the small islands that comprise Miami Beach. Financially, I’m on my own island of fiscal recovery, with a solid concrete wall sitting staunchly between me and my Dream House.

Tags: Miami-Dade