The Wall Street Journal - 19.08.2019

B6| Monday, August 19, 2019 THE WALL STREET JOURNAL.

personal financial planning at Kansas State University, says Mr. Liwanag’s approach is common. “We tend to try to find someone who is similar to us in that ground, financially and otherwise,” she said. Prof. Lutter’s research has

found that arguing about money is a strong predictor of a couple’s likelihood of di- vorce. A central idea in her research—that satisfaction with money predicts happiness in marriage—can also apply to friendships. Because financial

Building a Network With 52 ‘Dates’

Research shows most Americans make their closest friends at school and at work. Finding new friends in a new city as an adult, some say, can be difficult and costly. Rachel Bertsche, an author living in Chicago, chronicled her yearlong adventure making friends in her 2011 book “MWF Seeking BFF.” Ms. Bertsche went on 52 friend dates and spent around $1,300 to estab- lish a friend network in a new city. Now, she recommends peo-

ple give and look for cues when they’re first “dating” a new friend. “As you’re getting to know people, you’re slowly picking up on their attitudes about a vari- ety of things, and money is one of those things,” Ms. Bertsche said. If someone then suggests a night out at a fancy restaurant, that is a good time to bring up your own ideas for a different (aka, cheaper) hangout, she said. Responding with “That would be so great for a special occasion” or “Maybe we could try making one of the dishes at home” is a cue to the other person. Sometimes, finding a frugal

friend is about being in the right place. Jen Smith and Jill Sirianni, hosts of the “Frugal Friends” podcast, first met at a beach bar in St. Petersburg, Fla. Aptly enough, they bonded over a low-cost activity: The bar they chose offered free parking and free shots at sunset. The two chatted about why they loved doing free things, how they were on respective debt-repayment journeys—and from there, their friendship blossomed. Mrs. Sirianni and Ms. Smith don’t always balk at spending money on socializing. They as- pire to balance free activities with costlier celebrations.

fund, Pimco Total Return, as the firm’s top seller three years later. With Mr. Ivascyn’s fund raking in investors’ money, Pimco eventually stemmed the flow of assets that left to other bond managers follow- ing Mr. Gross’s departure. Pimco Income manages more than $130 billion in assets. Even with the recent downturn, Pimco Income still ranks first among similar funds over the past decade, Morningstar said. Pimco was also among the prominent bond managers caught flat-footed by Argen- tina’s Aug. 11 primary elec- tions, which triggered a sharp decline in both its local cur- rency and stock market. On Friday, Fitch Ratings cut its sovereign ratings of Argentina to CCC from B. “They didn’t get the full brunt of the pain, but they certainly felt it,” Mr. Jacobson said. Pimco had predicted the South American country would stabilize. “Despite these risks and our expectation for continued vol- atility, current valuations in Argentina’s credit and local markets look reasonable,” Pra- mol Dhawan, an emerging- markets portfolio manager at Pimco, wrote in an Oct. 11 blog post. Mr. Ivascyn said that Ar- gentine securities and its cur- rency accounted for a small part of Pimco Income’s under- performance and overall portfolio. Argentine assets make up less than 2% of Pimco In- come’s portfolio, a Pimco spokesman said.

values are important in both friendships and marriages, Prof. Lutter said, diverging views about money will affect the relationship. “I’ve definitely seen that just in my personal life with friendships: People will stop hanging out with each other if

BUSINESS & FINANCE

another friend starts wanting to go on extravagant vacations and the other person can’t af- ford it—it’s definitely going to influence that friendship.” Jonah Berg-Ganzarain, a 22- year-old publicist, said he has experienced this dynamic after moving from Boston to Chi- cago, where his peers, according to his estimates, spend be- tween $250 to $300 a week on going out with friends. “Already I can kind of feel the pressures of just different things: birthday parties, going out to network, hanging out,” he said. “I know some people who have pretty big friend groups and they go to five or six of these things a week.” A majority of Americans say they have around five close friends, according to a 2004 poll from Gallup, and Americans spend on average an hour socializing on week- end days, the American Time Use Survey found. But it is harder to measure exactly how much Americans spend on socializing. The average American mil- lennial household spends close to $2,500 a year on the broad category of “entertainment,” which can include everything from movie tickets to out-of- town trips to gym member- ships, according to consumer- expenditure data from the Bureau of Labor Statistics. Mr. Liwanag, whose blog is called “The Practical Saver,” said one important aspect of making frugal friends is being open and vulnerable about money. The bonus of frugal friendships, he said, is bonding over financial decisions. “The money topic is not taboo,” he said. “We talk when it comes to money. It’s not something to be shy about. You say, ‘Hey, we’re spending so much on food. How were you guys able to do this?’ You share knowledge and experiences in that way, and you’re able to bring down costs.”

Friendship has always
called for some maintenance
costs.
But in a world where birth-
day parties for milestones
might cost hundreds of dollars
and prewedding festivities of-
ten come with a price tag,
those hoping to stay frugal
canhaveahardtime.
Whether it is going to a
concert of your favorite band
or trying out a new wine bar
in town, hanging out with
friends sometimes means
opening your wallet.
“Back in the day, I’d have
friends who had nice cars,
who’d buy things, and I some-
how got tempted to buy those
things,” said Allan Liwanag, a
Maryland business analyst and
personal-finance blogger.
After climbing out of more
than $40,000 of debt, Mr. Li-
wanag and his wife got more
serious about their cash flow.
Now, they don’t just avoid
keeping up with the Joneses.
They include “hanging out” as
a line item in their budget and
prioritize spending time with
friends who adhere to a simi-
lar lifestyle.
“I make sure I associate
myself and my family with
those who have the same
mind-set as me: a frugal mind-
set,” he said. “My friends are
of the same mentality, so it’s
easierforustobefrankwith
them and have fun with them,
without having to shell out a
ton of money.”
Mr. Liwanag and his wife
allocate $100 every two to
three months to parties,
nights out with friends and
other get-togethers. They
leave some wiggle room in
case they go over the target
occasionally.
For those who’d rather
avoid spending a lot of cash
on friendship, Mr. Liwanag
found that age-old advice
about finding a spouse applies
here too: Pick the friends with
similar financial values.
Sonya Lutter, professor of

BYJULIACARPENTER

Frugal Friends Influence Finances

Rachel Bertsche, right, recommends people look for cues when they are going out with a new friend.

LUCY HEWETT FOR THE WALL STREET JOURNAL

loans as they had in the past. The prediction has largely come true, he said, and home- loan defaults have been lim- ited. By contrast, he said, stan- dards on corporate loans have deteriorated steadily in recent years. A slowing economy could trigger a wave of defaults. The Federal Reserve cut interest rates in July for the first time in more than a decade, deepening concerns of an economic slowdown. The demand for longer-term debt pushed yields on the 10-year Treasury note below two-year yields for the first time since 2007—another signal that the economy might soon slip into a recession. The fund’s recent struggles haven’t yet tested Mr. Ivas- cyn’s belief that home-loan bonds will hold up relatively well. He argued they will beat corporate bonds should economic conditions deteriorate, as they did the past few months of 2018. Don’t expect Mr. Ivascyn’s conviction to fade soon, Morn- ingstar analyst Eric Jacobson said. “If they looked at something and they think they’re wrong, they will bail out of it,” he said. “If they think they’re early, they’ll hold on to it. Dan’s not an emotional guy.” Pimco appointed Mr. Ivas- cyn, a mortgage trader, as manager of the income fund just as a housing bubble was tipping the economy into its worst crisis in decades. By early 2008, Mr. Ivascyn was scouring offerings documents on mortgage-linked bonds to determine which were more likely to meet their obligations to investors—and were more likely to recover in value as the crisis subsided. The work helped Pimco weather the downturn, juiced the returns of its income fund and changed the trajectory of Mr. Ivascyn’s career. Mr. Ivas- cyn succeeded Mr. Gross as the firm’s chief investment of- ficer, and his income fund sup- planted Mr. Gross’s former

Continued from page B1

Market

Tumult

Hits Pimco

Pimco Income Fund’s assets under management

Note: Figure for 2019 is through Friday. Source: Morningstar Direct

$150

0

50

100

billion

2010 ’12 ’14 ’16 ’18

Airbnb Inc.’s most recent financial data shows a strong cash position and a first-quarter growth rate above 30%, both key metrics that will draw investors as the startup positions itself to go public next year. The San Francisco-based home-sharing company had about $3.5 billion in cash on its balance sheet as of March 31, according to multiple people familiar with Airbnb’s finances. Those figures tell a different story than other initial public offerings from large technology companies. Real-estate business We Co., the parent company of WeWorks, which is expected to go public as soon as Sep- tember, unveiled its financial prospectus last week, showing operating losses of $1.37 billion in the first six months of this year. Ride-sharing business Uber Technologies Inc., which went public in May, faced investor concerns over its losses. The company lost over $5 billion in its most recent quarter, in part because of IPO-related costs. Technology businesses of- ten drown in marketing costs, but Airbnb has been able to grow while keeping these ex- penditures in line. Airbnb’s strong first-quarter performance got a boost from the 91 million nights booked through its platform, which amounted to $9.4 billion in total booking value, the people said. This measurement of total transaction dollars was up 31% from the same pe- riod the year before. For all of 2018, Airbnb re- ported a 40% revenue growth rate compared with the previ- ous year, according to a person familiar with the matter. Airbnb’s business is seasonal, with its peak periods coincid- ing with popular times of year for travel, particularly the summer. Airbnb previously has said its finances were positive on the basis of earnings before interest, taxes, depreciation and amortization in both 2017 and 2018. This is a different metric than profitability. The company has spent lit- tle of the more than $4 billion it has raised in venture fund- ing and debt, one of the people said. Airbnb last raised capital in 2017 from investors including Andreessen Horowitz, Sequoia Capital, Greylock Partners and General Atlantic. At that time, the company was valued at $31 billion. Up until last year, when e- cigarette business Juul Labs Inc. was valued at $38 billion, We and Uber were the only other U.S. venture-backed companies valued more than Airbnb.

Although 2019 has been the most active year since the dot- com boom for companies valued at $10 billion or more to go public, Airbnb instead has its sights on the first half of 2020 for a public debut, according to people with knowledge of its plans. Airbnb has yet to decide if it will pursue a traditional IPO or if it will follow the uncon- ventional path of Spotify Technologies SA and Slack Technologies Inc. to a direct listing, these people said. Companies don’t raise money in a direct listing as they do in an IPO, but Airbnb isn’t in need of capital. Although Airbnb is aiming to go public in the first half of next year, a person with direct knowledge of the planning cautioned the debut could be pushed back further. As is common with IPOs, the company will be keeping an eye on the stock market and broader macroeconomic conditions.

BYKATIEROOF

Airbnb’s

Financials

Show Solid

Growth,

Cash Pile

The home-sharing company hopes for a public debut in the first half of 2020.

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The Wall Street Journal - 19.08.2019

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