San Francisco Womens Journal » Money

Personal Wealth: How to Handle a Financial Windfall

SFWJ — Tue, 20 Jul 2010 12:34:57 +0000

Cathy Curtis

Some of us will be the fortunate recipients of a sudden, unexpected or unearned sum of money that can be life changing. Unfortunately, many of us will blow it. Such is the nature of sudden wealth.

by Cathy Curtis, Certified Financial Planner

Whether it is an inheritance, a bonus, a commission from a large business deal, or proceeds from the sale of a company – once the money hits the bank it can be hard not to spend it.

Often, the money will be three-quarters of the way gone before the beneficiary realizes that it may not last. Some get help to figure out how to manage the remaining sum, others just keep spending until it’s gone. Let’s face it: it’s not difficult to spend lots of money buying and furnishing a bigger house, collecting art, traveling, being generous with family and friends, or upgrading wardrobes and lifestyles.

How can a person avoid the pitfalls of sudden wealth?

1. Lock the money into a 6-month CD and experience a “cool-down” period to absorb your good fortune and experience the emotions that can come with getting a windfall.

2. Keep your job and don’t quit just because you receive a large sum of money.

3. Crunch some numbers. If you want to upgrade your lifestyle, create a new budget and calculate whether it is sustainable over your lifetime. If you aren’t good with numbers or need objectivity, make an appointment with a financial advisor who will do the projections for you.

Have your advisor prepare what-if scenarios depending on your dreams and goals. What if you quit your job and took a new one at half the pay to do what you love? What if you took a year-long sabbatical to study art history in Paris? What if you bought an $800,000 second home in Tahoe? Would your financial plan still work?

4. Once you know what you need to sustain your lifestyle you can build an investment portfolio. What you invest in will depend on your time horizon, risk tolerance and financial goals. Some may be invested for income and some for growth. Get help if you need it.

5. Choose your advisors wisely. When you interview advisors find out how they are paid. That information alone will tell you what kind of advice you may receive. Ask for references and check them.

6. If you want to help out family or friends with gifts or loans, go back to your financial projections to see if you can afford it. Keep transactions at arm’s length when possible.

Think about the future. Do you want your new fortune to last for a few years? Or do you want it to help you create a more comfortable life over many years? The good fortune of choice is yours!

Cathy Curtis is an independent fee-only Certified Financial Planner and CA Registered Investment Advisor based in the San Francisco Bay Area. Her firm, Curtis Financial Planning (since 2001) specializes in the finances of women, their families and their businesses.

Cathy passionately believes in Financial Literacy and educates consumers through her website CurtisFinancialPlanning, her blog: Of Independent Means, and her facebook business page Women and Money. She speaks frequently about personal finance issues – most recently at the Financial Women’s Association in San Francisco, National Association of Personal Financial Advisors Norcal Group, and the Commonwealth Club.

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Plan Your Wedding: It Starts by Choosing the Right Venue!

SFWJ — Mon, 28 Jun 2010 14:47:35 +0000

Laurel Winzler

We all think of June as the month for weddings. In fact, here in the SF Bay Area the fall is more popular, due to the good weather we experience in September and October. No matter when your wedding is; it all starts with choosing the right venue!

by Laurel Winzler
Floral and Event Designer

Starting the Process

If you’ve recently planned any type of party or social event, you understand how expensive it is to entertain in the Bay Area. The cost of venue, food, rentals, flowers, photography and entertainment is far beyond what most people anticipate. Many a bride finds herself immediately torn between the idea of the “dream wedding” she’s always wanted and the hard reality that it may exceed her budget.

No one can expect to “have it all” despite the costs. A wedding involves the efforts of many talented and experienced professionals, and the fees they charge can’t be negotiated away. Nor can the costs of materials, labor and transportation be compromised on.

No matter how much a bride wants top quality, unless she’s prepared to pay for it some trade-offs will need to be made.

It All Starts with Selecting the Right Venue!

The first thing that every bride does is select a location for her ceremony and reception. Every other aspect of the wedding is dependent on the venue, so making this first choice be the right choice is extremely important.

Event venues come in two types: commercial entities like hotels, restaurants and private clubs; or free-standing event spaces like mansions, social halls, art galleries, etc.

Commercial spaces offer the advantage of one-stop shopping, where things like food and beverage, rentals, audio-visual and cake are part of a package at a per-head cost for each guest. Independent venues (called “off premises” sites) typically offer nothing more than an empty space where every item for the wedding needs to be brought in by an outside vendor.

Many people opt for the all-inclusive approach because it means less leg work and fewer decisions. The disadvantage is that there will be less variety and flexibility in what’s offered, and it may seem less “personal” to the couple.

By contrast, an empty mansion offers endless possibilities for food and decor, but also many more details that need to be addressed and coordinated. And therefore more work and stress for the couple.

Understanding your personal priorities will help you make the right choice at the beginning of the planning process.

Do It Yourself?

As a result of financial pressures, many couples are saving money by working with family and friends to “do it yourself” on some aspects of the wedding. Many wedding magazines and other media are also encouraging this approach – which has its pluses and minuses.

On the plus side, you can reduce spending by creating your own floral decor, or by eliminating flowers altogether and opting for other types of decorations such as paper garlands, candles, lanterns, etc. to fill the space.

The downside of do it yourself is that you may be taking on tasks that are more complicated or time-sensitive than you realize, which will definitely add to your last-minute stress. You also may be burdening family and friends by pressing them to help out, thereby reducing their enjoyment of the wedding.

There’s a reason why professionals charge what they do. It’s important to balance the aggravation and stress of DIY ideas vs. the cost of having someone else carry that burden for you.

Striking a Balance

Without a doubt, the best way to contain costs in planning a wedding is to LIMIT THE GUEST LIST !!! This has the biggest impact on overall expenses, since the costs for venue, food, alcohol, rentals, cake and decor are directly tied to the number of people who will be attending. By keeping the head count fewer than 100 people, a bride has a better chance of getting the quality of event she wants, and has many more creative and interesting options to choose from.

As is so often the case, the best approach may be moderation. Determine what your priorities are – food? music? flowers? – and allocate a realistic amount of your budget to cover those elements. Decide where you can scale back your expectations, to have what you need but perhaps not what your “dream” would be.

And always keep in mind that you’re planning a party, so keeping it fun for you and enjoyable for your guests is the highest priority of all!

Laurel Winzler left a career in the legal world to establish her successful floral and event design business, Laurel Designs. She has built a reputation for innovative and exciting designs, serving clients from Bay Area brides to the San Francisco Symphony. Drawing on years of experience as a performer and artist, she specializes in working with each client to enhance the beauty of their homes, offices and special events.

Laurel is a preferred vendor at many exclusive Bay Area event venues, and donates her time and talents to many organizations, including San Francisco Opera, Special Olympics, Make-a-Wish Foundation, the Community Music Center, Project Inform and the Junior League of San Francisco. In addition, she is a sought-after speaker at hospitality industry events. Please visit her website, flaurel.com, to learn more.

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Divorce and Money: Splitting the Assets

SFWJ — Fri, 25 Jun 2010 00:52:07 +0000

Allison Gervais

If money is a problem in your relationship, it’s probably going to become an even bigger problem with divorce. What if more money is owed on the house than it is worth? What about retirment accounts?

by Allison Gervais
Sr. Mortgage Loan Consultant

Your Home Value is Upside Down and You’re Divorcing…Now What?

You’re in the midst of a divorce and the value of your home is less than your mortgage. How do you navigate thru these troubled financial waters?

One of You Keeps the House

If one of you wants to keep the house, remember banks rarely allow a person to take his/her name off the loan, thus relieving them of any financial responsibility. The standard way this is completed is through a refinance.

Sell the House

If you both decide to sell, the only option available (in this case) is if the bank is willing to participate in a short sale. A short sale means the bank will accept less money than the balance of the mortgage due to a decline in value. This option leaves both owners without any cash from the sale and also having to find a new place to live.

If you’re the one who wants to move out, consider the risk of leaving your name on the mortgage. If your ex misses even one payment, it will ruin your credit. You will also have a harder time obtaining other credit if you have the mortgage responsibility PLUS your new living expenses since the mortgage will remain on your credit as an obligation.

Wait for the Value to Increase before Selling

Another option is waiting until the value increases before selling. This gives you the possibility of higher proceeds to share upon a later sale date. The two of you would need to decide who lives there (you could even rent it out) and how the mortgage gets paid. It’s a matter of deciding if you want to cut your losses now or stick it out for the market to turn around. There is also a moral decision as short selling or foreclosure allows you to walk away from an obligation you originally agreed to pay.

What about our Retirement?

Divide Retirement Assets without Liquidating

Another point to consider is that retirement accounts like 401(k)’s and pensions do not have to be liquidated to be split. In fact, closing or pulling money out of these accounts early will almost always land you with administrative charges, penalties and a load of deferred taxes.

A much smarter option is to divide the accounts via a Qualified Domestic Relations Order (QDRO). This order will segregate the funds in the account between you and your ex, while leaving the money where it is. Once the QDRO is entered and approved by the pension company, you will each own a separate part of the account.

You can each independently withdraw money if you have to (but will have to pay penalties just as if you were not getting divorced). Or just leave the account intact in the expectation that the value will increase when the economy improves. Some people make the mistake of just keeping their individual accounts and the person with more transferring over the difference. All accounts are not the same and you could end up with a lesser performing fund.

Talk to a CDFA (certified divorce financial analyst) or Financial Advisor for advice, not just your attorney. If you were not in control of your financial situation during your marriage or feel lost with getting back on your feet, a Divorce Coach can help you budget and map out a plan through the process, saving you money on attorney fees. You don’t have to do it alone!

Allison Gervais is a Senior Mortgage Loan Consultant with First Capital Group – a mortgage company in San Francisco, CA. She offers residential and commercial financing. Allison is also a Certified Divorce Financial Analyst and uses her expertise to assist clients with the equitable division of assets. Please e-mail Allison for more information.

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Ups and Downs of the Stock Market: What’s the Impact on Your Investments?

SFWJ — Thu, 10 Jun 2010 15:24:08 +0000

Tuesday, May 25: Just another day in the stock market: The DJIA (Dow Jones Industrial Average) was down over 200 points mid-day but finished down only 22.82. It bounced around a lot all day. This kind of volatility has gone on for a long time now.

by Cathy Curtis, Certified Financial Planner

The Dow started out on January l, 2010 at 10,428 went as high as 11,205 on April 26, 2010. The low point so far this year was reached on February 8^th when the Dow ended at 9908. The 52 week range of the DJIA (May 2009 to May 2010) was 8057 to 11,309. Before that, the recession low was hit on March 9, 2009 at 6547 – level not seen since 1996. Are you dizzy yet?

The point of citing all these statistics is to illustrate that volatility isn’t unusual and isn’t going away.

The Dow…is made up of only 30 stocks and is not the perfect proxy for the stock market! But it’s the most widely recognized and you can be sure that the S&P 500 and the Nasdaq were jumping around too.

Simply Put…Stocks are Volatile

Volatility is a characteristic of stocks. (The volatitality of stocks is #9 on my list of 10 Simple Truths about Money!) Just like you have a gregarious personality or are shy, stocks have volatility.

Volatility measures the relative rate at which the price of a stock moves up or down. Usually the riskier the stock is perceived to be, the more volatile it is. However, this doesn’t imply that the riskier stock will end up losing value over time. This is where most investors get confused.

Volatility Does Not Imply Direction of a Stock or the Stock Market

The long term trend of the market is up. Compare investing in the stock market to raising a child. There can be emotional ups and downs over the years as the child grows up and matures.

Would you abandon your child because he throws a huge temper tantrum in the cereal aisle at Safeway? No. You will patiently get through that episode and many others like it because you know in the end you will have raised a loving child who will take care of you in your golden years.

The stock market behaves the same. It can drive you crazy with worry as it goes up one year 20% and down the next 10% and then back up 30%. But, if you hold on you will be rewarded by better returns on your money than you can get in less volatile assets such as bonds or CD’s.

Stock Volatility and the Impact on Retirement

But, you ask: What about people who are nearing retirement or who are in retirement and the stock market drops like it did in 2008?

Good question. Short-run volatility in the stock market can be a big problem for retirees and for other people who have near-term needs for their money. No one wants to sell a stock when it is down 30% (if it is a perfectly good stock). This problem is easily resolved: a good rule of thumb is that any money that you will need to spend within 3-5 years should probably not be invested in the stock market – especially if you are not earning any money.

Most experts don’t agree on what causes volatility to fluctuate or what causes it in the first place. When unexpected things happen, volatility seems to increase. Which doesn’t help us much because nobody can predict the unexpected. A quote from the book Against the Gods: The Remarkable Story of Risk, sums up the risk of volatility nicely:

“The real risk in holding a portfolio is that it might not provide its owner, either during the interim or at some terminal date or both, with the cash he requires for essential outlays” Robery Jeffery, investor.

Here are a few tips to help to increase your comfort level with volatility:

1. If you are retired or not earning income keep 3-5 years of cash needs in money market funds, Treasury Bills, CD’s or other short-term money market instruments.

2. If you are working, maintain an emergency fund of 3-6 months of living expenses.

3. If you are worried about losing your job, increase your cash nest-egg to at least one year of living expenses.

4. Maintain a diversified portfolio of stocks, bonds and cash depending on your risk tolerance and time horizon. (Not all asset classes go up and down at the same time, reducing volatility.)

5. Don’t just sit on your assets. Rebalance your portfolio occasionally to take advantage of volatility in an asset class: buy low, sell high.

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Success Tool: Step beyond Exam Anxiety with Hypnotherapy!

SFWJ — Tue, 01 Jun 2010 13:26:00 +0000

This week a wonderful email landed in my inbox. It was Annie announcing the opening of her acupuncture office. She’d achieved her dream! And hypnotherapy helped make it come true.

byJane Ransom, Certified Hypnotherapist

Exam Anxiety Blocks Achievement of…
Your Goals

More than a year ago, Annie had failed the state board exam for acupuncture. The day-long test is notoriously hard. Many people fail it the first time around. But Annie is a highly self-disciplined and intelligent young woman who knew the material inside out.

Her problem was exam anxiety. And so, last December, she came to see me. She was signed up to retake the state boards in February, and wanted to know if hypnosis could dispel her anxiety. Short answer: Yes!

Some people suffer their whole lives from exam anxiety. Occasionally we can trace the cause back to a harsh upbringing. But just as often, there’s no clear origin; the fear takes on a life of its own. Indeed, it usually gets worse with time.

How Anxiety Takes Control of Your Mind

Whenever the person goes to take an exam, their sympathetic nervous system kicks in, putting the test-taker into “fight-flight” mode. Their heart speeds up, they perspire, their blood rushes to their inner organs. This is helpful if you’re in mortal combat or fleeing a saber-toothed tiger. But it’s no good for focusing your logical mind or accessing memory.

Each time the experience reoccurs, the subconscious mind forms a stronger association between exam-taking and “fight-flight.” A snowball effect occurs. Soon the anxiety is triggered when the sufferer merely thinks about taking an exam! Even studying becomes fraught with fear. The constant anxiety causes exhaustion, yet sleep can become elusive as insomnia adds to the snowball.

Annie’s doctor had prescribed Paxil to quiet her nerves, but the drug impaired her ability to concentrate. As her date to retake the exam approached, she was going off the Paxil and she wanted my help. We began in December with a two-hour session to condition her to sleep well at night without drugs. We agreed she’d come back in January to begin five weekly sessions to prepare for the exam.

Retraining Your Subconscious Mind

During each session we “desensitized” her to studying and test-taking. In every session, I had her visualize in great detail her studying routine and the day-long exam. The key was having her imaginatively experience those events while in a state of deep relaxation induced by hypnosis.

In that manner, I coaxed her subconscious mind to let go of the negative association between test-taking and anxiety, and to replace it with a positive association involving relaxation. Her subconscious mind learned to associate studying and test-taking with relaxation, mental focus and recall.

On the day of the actual exam, Annie felt calm and confident, able to access her full mental powers. By the end of the day, she knew she’d passed. Weeks later when scores were officially announced, she called to share the good news.

Ecstatic, she exclaimed, “This is the beginning of my new life!” It will be, among other things, a life free of exam anxiety.
Jane Ransom, MA, C.Ht., conducts hypnotherapy sessions in her downtown San Francisco office, as well as by phone and online web-cam. She helps clients with a multitude of health issues, including weight loss, chronic pain and smoking cessation, and she also leads clients to achieve career, sports and artistic success.

As a public speaker, Jane offers talks and workshops on how to boost self-confidence and motivation, improve relationships and invite inspiration. For more information, please visit Jane’s website, HypnotherapyThatWorks.

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Divorce and Your Home: How to Split your Most Important Asset

SFWJ — Mon, 24 May 2010 11:11:00 +0000

The declining real estate market has added another headache to couples who are divorcing… “What should we do with our home?”

by Allison Gervais
Sr. Mortgage Loan Consultant

Many couples are forced to come up with creative ways to deal with this dilemma. With the popularity of do- it-yourself mediation and collaborative divorce, couples are able to find solutions that are helpful while the economy is less than favorable.

Divorce and Creative Solutions to Settling the Home Dilemma

I’ve spoken with many clients who own a home together, married or not, and have decided to end their relationship. In the past many couples simply opted to sell their house and split the remaining proceeds from the sale.

But with the decline in the housing market this is currently not the most favorable option. Adding to the complexity, quite often one partner wants to keep the house, especially if there are children involved.

Couples are negotiating more creatively with the help of professionals to find solutions to this issue when a full cash buyout is not an option or not the best solution. (For example a person may not want to cash out a retirement account that has hefty fines and tax penalties to buyout an ex.)

What Steps Need to be Taken to Protect the Divorcing Parties

It’s in the best interest of the person moving out to remove their responsibility to the mortgage. If their ex makes even one late payment, it will ruin his/her credit. The obligation could also prohibit future loans.

Taking one’s name off the mortgage is historically done through a refinance since the banks don’t usually allow one person to simply remove their name from the mortgage obligation. Fortunately the rates are still extremely low so it makes qualifying a little easier. Adjustable rate loans are a great option when qualifying is an issue.

What if there is not enough equity to completely buyout the other person?

This is where couples can get creative.

Example: Kate and Mark are getting divorced. Mark is moving out of the family house and Kate owes Mark $50,000 for his share of the equity. Kate is only able to obtain a rate and term loan, meaning she cannot receive any cash out to pay Mark off.

What are her options? She has money in retirement but does not want to cash it out and pay penalties.

1. One answer is for Mark to be taken off the loan through the refinance, but remain on the title to the property.

This takes away the mortgage responsibility but keeps his interest in the property. They can decide to sell at a later date, when the real estate market increases, and Mark will receive more equity at a later date.

2. Another popular option is for Mark to secure a note on the property and Kate pays him monthly payments at a certain interest rate.

Kate would want to consider what the market rate is and if it is feasible to make an additional payment each month. Mark would want to consider the consequences of tying up his equity in exchange for earning interest on his money. The interest rate is negotiable between the couple; however, most consider the current market rate and the length of time the loan is paid back.

Be Open to Compromise

There is not a perfect standard solution as each situation differs and tax consequences vary. Both parties need to be open to compromise.

If couples are able to think clearly, logically and have good communication, they will save money in the long run and have a less stressful separation. Creating short term and long term solutions and goals helps keep both parties protected.

Contacting your mortgage broker is the first step to find out if refinancing is an option.

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Manage Your Budget with Envelopes!

SFWJ — Mon, 10 May 2010 12:19:47 +0000

I recently recorded a short video illustrating a tip for controlling spending weaknesses.

Those who saw it found it very useful: a husband who showed it to his wife who insisted that their teenage daughter watch it; a S.F. fashion stylist (Kristina Moore of MooreonStyle.com) who wrote: “Great video! A guilt free spending solution! S-M-A-R-T;” and friends and family who asked “Cath, do you do this yourself?

Of course! I walk the walk.

by Cathy Curtis, Certified Financial Planner

The tip is called the envelope system. I wish I could have come up with a more original name. There are 50 videos called “Envelope Budgeting System” on YouTube and a google search brought up 914,000 results! But I put my own little spin on my system and it works! Here’s how:

Own Your Spending

First off, you have to admit that you have a spending weakness.

Mine happens to be anything that adorns the body – clothes, shoes, jewelry and make-up. Yours may be dining out, tickets to concerts, sports equipment or comic books.

Then, you figure out the amount of money you can afford to spend on your weakness. The basic formula is: Income - Necessary Fixed and Variable Expenses – Taxes – Savings = Discretionary Spending Money.

Next, you answer the question “How much of this discretionary money do you want to put towards your favorite thing per month?”

The Envelope Budgeting System

• Once you have settled on the monthly budget, go to the bank and withdraw six months worth in cash.

• Label six envelopes by month (May, June, July, etc.). Then divide up the cash and place it in the envelope along with an index card.

• Place the envelope in your purse or wallet and each time you buy something describe it on the index card. Note the price and the date purchased.

• When you run out of cash you can’t buy anymore until the following month.

• If you have money left-over, either put it into savings, start an envelope for the next six months, or treat yourself to something nice.

• Repeat each month.

At the end of six months, retrieve the index cards and study them. Evaluate whether you got as much pleasure out of the things or experiences that you anticipated. Was it worth the money? If not, reduce the monthly budget for the next six months.

Here’s my video talking about my Envelope Budgeting System

Change Your Spending from Unconscious to Awareness of Your Spending Habits

The point of this exercise is to bring awareness to your spending which can be unconscious. It also brings a sense of control which is many times lacking with spending weaknesses. I find it very empowering. For example, if I get a notice for a sale at a favorite shop and I am out of money, I won’t go. If a friend tells me she’s selling a fantastic line of clothing and is having a trunk show, I won’t go unless I have the cash. And the fun part is, the new month will be there before you know it!

A few things that can trip you up:

1. The Internet: After you push “buy”- take the money out of the envelope, it is gone.

2. You change purses and forget your envelope. You use your credit card. No problem. Take the money out of the envelope.

3. Borrowing from the next month: not allowed under the system rules.

Try it, I think you will be surprised and happy with the result.

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Creative Ways to Lower Your House Payment!

SFWJ — Thu, 15 Apr 2010 12:52:10 +0000

I have spoken with countless people who are having a difficult time making their mortgage payments. Most often it is due to a job layoff or divorce.

by Allison Gervais Sofnas
Sr. Mortgage Loan Consultant

There is Just Less Money to Pay the Bills

Many self-employed homeowners are making less money the past few years due to the economy. Money is a big factor with relationship issues and many couples are separating or divorcing. This causes an increase in living expenses due to securing a second home or rental for the spouse moving out.

The bills become less affordable with the biggest one being the mortgage. If a refinance can be secured, there are several options for lowering payments with either an adjustable or fixed rate mortgage, especially since rates are still at all time lows.

It’s Time to Get Creative!

So what do homeowners do when they cannot afford the mortgage payments any longer, can’t qualify to refinance and don’t want to sell their house? It’s time to get creative and find an investor for your house.

I spoke with a client recently who owns a condo worth $700,000, owes $500,000 and cannot qualify to refinance. If she could lower the amount owed to $417,000 or less, she would qualify. She is cash poor and doesn’t have the extra $83,000 to lower the loan amount down to $417,000. (the conforming loan maximum where she could secure a lower interest rate)

Why not Find an Investor to Help?

An investor could put in $100,000 in cash, thus allowing her to refinance the mortgage into a conforming loan with lower payments. She agrees to split the equity with the investor when the market rebounds and she sells or refinances her mortgage down the road. It’s a win-win situation for both of them.

This creative investment situation happens most often with relatives as the investor. Many parents plan to pass on their wealth but are not in a position where they can simply gift the money now.

Let’s say the existing mortgage on the example noted above of $500,000 is at a rate of 5.5% with a payment of $2839 per month. If you decrease the balance to $400,000 and lower the rate to 4.875% 30 year fixed, your new mortgage payment would be $722 less per month.

If you opted for an adjustable fixed for seven years, you could save even more. This could be the difference between being able to hold onto a property you otherwise were struggling to afford.

What’s in It for the Investor?

What’s in it for Mom and Dad? (Or whoever else invests in your property) If the property increases back up in value to $900,000 at a 5% annual increase, by the year 2017, their initial investment has doubled, thus earning a return of approximately 10% per year. This is much better than leaving it their bank account or a low interest CD and they got to help out at the same time.

When they are bought out, there will be capital gains taxes but do the math, it still works out in their favor and you benefited from being able to keep the property at a much lower payment for those 7 years.

What if the market doesn’t come back around and stays flat? Your investor still gets their money back and to sweeten the deal you could always add in a minimum gain to their commitment, thus decreasing your equity if the market remained flat or declined.

To see if a situation like this can work for you, contact your mortgage broker and a licensed EA or CPA (to discuss the tax consequences) as a first step.

Allison Gervais Sofnas is a Senior Mortgage Loan Consultant with First Capital Group – a mortgage company in San Francisco, CA. She offers residential and commercial financing. Allison is also a Certified Divorce Financial Analyst and uses her expertise to assist clients with the equitable division of assets. Please e-mail Allison for more information.

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How Much are You Really Spending on Your Clothes, Shoes and Accessories?

SFWJ — Mon, 05 Apr 2010 13:19:40 +0000

We have a tradition in our family. We go to a movie every day during the holiday season from December 25th right through to New Year’s Day. It’s a fun tradition that I always look forward to.

by Michele Benza, San Francisco Image Consultant

Michele Benza

My Ah-Ha Moment!

Last December, one of my favorite movies was “Up in the Air.” George Clooney plays the main character, an executive, who travels around the country to fire people. He has no life to speak of. He carries all he needs in one wheel-away suitcase.

This movie provided an ah-ha moment for me. What if I were to empty my dressing room and throw all my clothes–accessories, coats et al– on my bed and contemplate their value?

The first question that came to mind was, ‘do I really need all these clothes?’

Looking at the pile, I could not help but wonder how much money I’d spent for each item. Was it worth it? Was it a good investment? I started to add the numbers in my mind. Oh boy! How many hours had I worked to pay for all that? Scary? You bet!

How Much Do My Clothes Really Cost?

I decided to create a spreadsheet and to calculate an approximate cost-per-wear (CPW) for each item. It gave me a good idea of how skilled I am at investing in clothes. (Okay! Go ahead and scroll down for a peek at my best CPW items).

For those of you who are not familiar with CPW, it’s a concept that rationalizes the expense of a garment by dividing each time you wear it into the original cost.

Cost-per-wear means spending money on a piece of clothing that you will wear continually, making it a good investment. The more you wear it, the better the returns on your initial purchase. It does not matter whether the item is an expensive pair of Christian Louboutin shoes or an H&M skirt or, whether you spent $2,000 or $100 on an item, just as long as you get your money’s worth.

What’s the Right Amount for Cost per Wear?

According to some of my colleagues, the ideal CPW should be $2. I disagree with that number. Achieving that goal poses a real challenge for those who have ‘a closet full of clothes and nothing to wear’ don’t you think?

In my opinion, the CPW should certainly not exceed your hourly income. By the way, this applies for your lunches too. Have you ever calculated how much you have to work just to buy your daily lunch?

The worst CPW comes with items that result from impulse shopping. It’s been a long time since I’ve shopped during a moment of weakness without any plan in mind. But believe me, I can attest that the very worst CPW results from those spontaneous purchases.

Here are my top four CPW items, and what I consider my best investments of all time:

1. An EtcEtc Black Suit that I bought in 2004. Apx Cost per Wear? $5.00!

2. A BCBG bag that I bout in 2007. Cost per Wear? Less than $2.00!

3. Shoes and matching handbag that I purchased in 1996 from Emporio Armani. Cost per Wear? About $3.00!

4. And finally, this scarf that I purchased decades ago…

This scarf cost me an arm and a leg when I bought it. But I am still wearing it today and get lot’s of compliments. Cost per Wear? Next to nothing!

I am pleased to report that my average CPW on my entire wardrobe is less than $5.00.

Now, I challenge you to examine YOUR pile of clothes. Which items were your best investments?

A la prochaine!

Michèle
Michele Benza is the founder of “Michele Benza Image Consulting and Posture” a program that focuses on enhancing one’s personal and professional image. She is certified in image consulting from European Institutions and her niche is European style and elegance. Michele is a member of the Association of Image Consultants International (AICI) and is the only American member of the Association Francaise pour L’image Professionnelle et Personnelle (AFIPP)!

Michele Benza is San Francisco’s best kept secret! To learn more, please visit her website at MicheleBenza.

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How to Indulge Your San Francisco Foodie Passion…on a Budget!

SFWJ — Wed, 24 Mar 2010 14:19:24 +0000

The third truth in my 10 Simple Truths About Money is …Live Within Your Means: Don’t Spend More Than You Earn (or Contrary to Popular Opinion, You Weren’t Born to Shop!). If you are a foodie living in the Bay Area – this is DEFINITELY easier said than done. But don’t fear, help is on the way. With a budget and some savvy practices, you can eat well and avoid overspending.

by Cathy Curtis, Certified Financial Planner

Cathy Curtis

One of the greatest joys of living in the Bay Area is the multitude of options for eating really well. The food culture is so strong that eating out has become THE entertainment of choice.

Indulge Your Foodie Passion and…
Stay on Budget!

Whether it be the hottest new restaurant in the Mission or Oakland, or the food truck that parks down the street from your office, it’s not hard to indulge your foodie passion – or to bust your budget eating out.

But, suggesting you deprive yourself of the food scene that rivals that of New York or Paris, is not the intention of this post. Instead, try out these strategies and tips for indulging your gastronomic and enophilic passions and still have money left to pay the rent!

Strategy: Create a Budget

1. Add up all of your monthly non-discretionary and necessary expenses (including taxes and savings). Subtract this amount from your monthly income. What is left is discretionary income. You can spend this money anyway you want to.

2. Create a budget for eating out from you discretionary $$. Make your choices based on what gives you the most pleasure. This is where the hard decisions come in.

Would you rather eat out three times a week or buy season tickets to the symphony or go on a B&B weekend once a month? Is a new outfit more important to you than dinner at Chez Panisse? Would you rather buy books or breakfast?

3. Track your budget. Each time you go out to eat, track the expense in a notebook, on-line, on a chalkboard in the kitchen, whatever method works for you.

Stop spending on eating out when you hit your limit.

4. Withdraw your eating out budget in cash at the beginning of each month. When the cash is gone, no more eating out until the next month.

Tips for Stretching your Eating Out Dollars

Key point: Save your eating out dollars for the really good stuff, don’t fritter it away on the mundane.

1. Use groceries for as many meals as possible:

Bring your homemade lunch to work
Fill a thermos with your favorite home-brewed coffee
Carry baggies of snack foods: nuts, dried fruit, tangerines, crackers, energy bars in your purse.
When you cook at home prepare for more than one meal so there is always something good to eat.

2. Too busy to stock up the fridge? Buy prepared foods at Trader Joes or Whole Foods for lunch.

3 . If friends invite you to a restaurant that’s too rich, suggest going out for drinks or offer to join them for dessert instead.

6. If you belong to groups that usually meet at restaurants, suggest rotating potluck gatherings at your homes instead.

7. If you order a meal that is less expensive than your dining companion (s), suggest that you split the bill according to what everyone ordered.

8. Share a bottle of wine instead of buying by the glass.

9. Drink beer instead of wine. Or skip wine altogether. (Not easy, I know).

10. Order appetizers instead of main courses.

11. Sit at the bar and eat. You will feel less pressure to order a full meal.

12. Order pizza. You can’t go wrong in many places and it’s usually the least expensive and most filling dish on the menu.

If you don’t spend your full budget in a month, treat yourself the next month and splurge on a favorite restaurant!

I am sure that you have developed some savings strategies and tips on your own, share with your fellow foodies by replying to this post. Bon Appetit!

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