Archive for April, 2009
What do you do if you find yourself with a lot of unstylish debt you know you can’t pay back?
First, stop, absolutely stop, using your credit cards. Find a way to live within your means.
Second, pay off your credit card debt. If your credit card debt is the debt you can’t pay, you can often work with the credit card company to set up a payment plan or to reduce your interest rates. If your credit card company won’t help you, you can call a reputable credit counselor for assistance. Often, they will work with your credit card company and other companies you owe money to and can help reduce what you owe. Log onto www.consumercredit.com for assistance finding a credit counselor who can help you.
Third, if you have many types of the same kind of loans, consolidate. Consolidation means you group all of your similar loans together with just one company. For example, you can get a student consolidation loan where you combine multiple student loans and pay a fixed interest rate to just one company. Or you can combine all of your credit card balances onto one single card (with a lower rate than those you have) that you pay off on a regular basis.
Fourth, beware of scams. There are a lot of con artists who prey on people desperate to solve their credit problems. They may offer to get your debt “suspended” or “canceled” if you pay their fees in advance, sell you supposed credit protection, or offer to help you re-build your credit. These kinds of offers can be very tempting, especially when you are vulnerable. Remember, if it sounds too good to be true, it probably is. Keep in mind that saying about free lunches, as in, there’s no such thing.
The most crucial thing to learn about debt—after the number one rule, which is don’t incur it—is that you should always take it seriously. Wasting it on something frivolous does not become a true Fashionista. A true Fashionista searches out the highest style, but only at a price she can afford.
April 30th, 2009
Shopping for big ticket items is no different than shopping for smaller stuff – except of course for the stress, price and worry that you are about to make a HUGE mistake. Seriously, there are a lot of things you will want to buy (a car, a house, an education, designer clothes, shoes and bags) which are a big investment and require a lot of money and/or a lot of debt. Making the right decision involves four things (plus courage):
- Sorting your wants versus your needs (you want Chanel you need a purse)
- Doing your homework (research)
- Timing your purchase correctly (believe it or not, many big ticket items like cars have times during the year when they are cheaper than other times)
- Determining your financing (how you pay has a big effect on the total price)
Just think of big purchases as ultimate shopping. First, you must sort your wants versus your needs. Before you invest your hard earned money on anything that is expensive, you need to know why you want it, if it is the right thing for you, and if there is a more affordable substitute that will satisfy you.
Second, you must do your homework. I know it is hard work, but it is important to know what you are doing before you do it. You must do research. Every big ticket item you buy has these kinds of questions and more. You wouldn’t let someone buy you diamonds without knowing the four C’s would you? You must research the questions and figure out your answers. Do your homework by researching on the internet, asking your friends and family and by talking to professionals.
Third, you need to time your purchase. You need to know if it is the right time for you personally (why now and can you afford it) and if it is the right time to buy the item. Some big ticket items have times during the year when you will get a better deal. I know you know all about sales!
Finally, how you pay for what you buy has an effect on the total cost and whether this is the right decision for you. This is true for any big purchase. The more of your own money you pay the less money you will need to borrow and the cheaper the money you borrow will be. In addition, the less you need to borrow, the better your net worth and the better your credit score and the lower the interest rate. You need to save as much money as you can before you make you make your purchase so you will have to borrow less money to get it.
April 25th, 2009
A credit score, also known as a FICO® score, is a particular calculation of your credit history that measures your trustworthiness to lenders. It is a number that credit-givers, such as credit card companies and car dealers, use to help them decide if they want to loan you money, by answering the following questions: Can they expect you to be able to pay them back as agreed and what are the odds you won’t pay them back at all? What amount do they feel comfortable loaning you? How much do they want to charge you? The less confidence they have that they will be paid back, the more interest they will charge you.
In Fashionista terms, a credit score can be the difference between being granted VIP status or being shown the door at your favorite store or club. A credit score tracks whether you are more likely to be a good customer or a bad customer.
Think of your favorite store. If you visit it frequently, are nice to the staff, are enthusiastic about their merchandise, and avoid bad behavior such as shoplifting or always trying to pay less than retail, they will love you. They’ll put you on their VIP list, you’ll get first dibs on new selection, sales and discounts, they’ll call you ahead of time to let you know your favorites are in stock, and in many other ways, they will take extra special care of you. On the other hand, if you’re a complainer who’s rude to the staff, reluctant to pay retail, and constantly return items for no good reason, you’re unlikely to be welcome, and in fact, will probably be discouraged from coming at all. The golden rule works here: Treat the stores the way you want to be treated, and the good karma will come back to you.
You can guess where I’m going with this. The more you respect your credit score, the more lenders respect you in return. This becomes really important when you suddenly have some big ticket items you’re thinking about buying.
Your credit score is a number that is assigned to you by a credit agency; it is a snapshot of the credit risk they judge you to be at a particular point in time. Credit scores range from 300, indicating you’re a poor risk, to 850, indicating you’re a great risk and will be offered the best deals.
When you borrow money or apply for a credit card, you typically go to a bank or credit card company, which will immediately look at your credit score. How much money did you earn, and how much did you spend? How responsible were you? Did you honor your commitments and pay your bills on time? What is your current net worth? The more responsible you have been financially, the higher your score. And a high credit score means that you will be allowed to borrow more money at a lower interest rate than a person who has a lower credit score.
So if you’ve got a great credit score, you can buy your car or your house more cheaply than can someone whose credit score is lower. Why? Because, you will pay less interest. Less interest is your reward for having built up such a respectable credit score. (With the money you save on interest you’ll have more left over… for other things, such as designer clothes and footwear).
To find out your score, call any one of the three credit agencies listed below and ask for your credit report. By law, you are entitled to one free credit report per year. If you want to check it more than once a year, like when you are purchasing something big, then you’ll pay a low fee to get a second report.
Equifax: www.equifax.com (800-685-1111)
Experian: www.experian.com (888-EXPERIAN)
Trans Union: www.transunion.com (800-916-8800)
So how do you maintain VIP status with your credit score? Review the five factors the credit agencies use to score you and try to maximize your points in each category. Pay your bills on time. Have at least one credit card, buy a little with it every month, and then pay the bill in full. If you have debts, pay them down or off. It might take effort and time to improve your score, but it can be done.
April 23rd, 2009
“Buy less, wear it more” is a great mantra for the season. When faced with an impulse to excessively shop, just repeat over and over while backing out of the shoe department.
Fashionista Fact:
Even Michelle Obama is repeating outfits: http://www.huffingtonpost.com/2009/04/14/michelle-obama-repeats-an_n_186783.html
April 16th, 2009
Some statements ring true: “I love those shoes!” Some false: “No, you haven’t gained any weight.” And, some you just plain ignore.
What do you do with the statements you receive from your bank or from your investments? Do you use them to reconcile your checking account? Do you actively look at your portfolio? Or, do you do you toss them unopened into a drawer?
As daunting as it can seem, it really is a good idea to open them up and take a good long look. You should reconcile your bank account very month. Reviewing your statement and balancing your account ensures you know where every penny of your money has gone – except of course the cash that keep disappearing from your wallet; we’ll save that for another blog. Reviewing your statements also helps prevent identity theft for the same reason – you’ll know quickly if someone has been using your accounts.
Your brokerage statement is no different. If you have investments you should be reviewing them regularly. You want to make sure your investments goals are being met and that your portfolio is diversified.
Not convinced? You’ll need to know how much money you have before you can know if you afford this season’s staple: the statement dress. The best way to do that? Open your statements.
Fashionista Fact:
This season it’s all about the statement dress. (www.net-a-porter.com) It’s a great solution for any event – office to wedding. Add a blazer for the office, leggings for day, high heels for evening, or belt it for a new shape. Find a great one … but not two or three!
April 14th, 2009
Too good to be true? Actually yes, but we’re getting closer. Scientists have discovered a type of fat in our bodies called brown fat. I know more fat is hardly cause for celebration. But we LIKE brown fat! Turns out, brown fat burns calories. Yes, you did read that correctly, burns calories. And, even better, it’s activated by low temperatures. So turn off your thermostat, don’t buy that pea coat, and scrimp on sweaters. You’re wallet and waistline will thank you!
http://www.cnn.com/2009/HEALTH/04/10/brown.fat.obesity/
April 13th, 2009
2009 the recession years….
Carrie, having been downsized from Vogue, is working as a freelance editor. The decline in the publishing industry seriously crimped the advance on her fourth book. As a result, it was not nearly what she was expecting. Thank god she and Big did not take the pre-war penthouse – house poor is not fun. Big is still employed but she’s had to learn to look fabulous on a budget (buying So Many Shoes, So Little Money helped).
Samantha, savvy woman that she is, invested the earnings from her public relations company in cash equivalents weathering the economic crash nicely. Although business is slow, and most corporate events cut way back, managing Smith proved a boon to her standing and she still reigns atop the New York party and social scene. However, since she has cut down on the VIP lounges – bottle service is still not cheap. Although she keeps up with her hair and botox (fifty really is the new thirty) she has stopped most of her other high expense maintenance – and is banking the savings.
Miranda’s billable hours were cut back. She, Steve and Brady are getting by…Brooklyn really is cheaper than New York which would have been tricky to muster. Plus, now that Miranda has moved back home, they are saving on fortune by not maintaining two households and cutting back on her passion for Chinese take-out. She couldn’t believe how much take-out really added up. Yes, the lawyer now cooks. Steve handles home repairs (helping to keep expenses low) and Brady is in public school (although she would have preferred private).
Charlotte, Harry, Lily and Rose have also weathered the market. Divorces are on the rise so Harry’s practice is actually growing. Charlotte has started a successful breeding operation and Elizabeth Taylor has turned out to be quite fertile. But they are still watching things – they know that right now nothing is certain and things could change. With two kids to care for, a penny here really is a penny there. Carrie loaned her a copy of So Many Shoes and she’s found that shopping for classics really suits her style.
The girls still meet regularly at the dinner but have cut back a bit on the cosmos – and the shoes.
April 8th, 2009
In your bank account – how big is yours?
Actress/model/waitress. Writer/Waiter. Investment banker/Dog walker. No matter how you slash it, finding a job in this economy is difficult. That’s why savings matter. When times are good, it is so easy to spend a little here, spend a little there – after all what’s a $20 drink between friends. When times are bad, those carefree habits can hurt. Suddenly you find your cushion – or complete lack of one – stressed to the limits. That’s why it is so important to save. You should save when times are good and it is relatively painless. You should also try to save when times are bad and it hurts.
How much should have in savings? Three months worth of living expenses is the minimum. That means enough to cover the things that really matter, for example your rent, loan payments, groceries, utilities. Six months would be better. As we have seen in this economy it can take at least that long – if not longer to find another position.
Some cuts are easy: did you go out to lunch today? That money could have been put in the bank. Did that sweater set, the one on sale, the one that makes your cropped pants perfectly perfect, cause spontaneous credit card use? That too, could have gone in the bank. Did you have more than one or two drinks when you were out this weekend? You get the idea.
If you are already way past those kinds of cuts you’ll have to dig deeper. That may mean canceling your land line and relying on your cell. Or canceling cable and relying on network TV. Hard times call for hard choices. Finding a way to live within your means can be incredibly challenging – but it is worth it.
So next time someone asks, “does size matter”, you’ll be able to answer yes with a smile and cash cushion.
April 6th, 2009