Posts Tagged ‘financially fab’

Will applying for rewards cards hurt your credit score?

Ever see the reward cards that advertise thousands of travel miles for just opening an account?  I recently got the Capital One Venture Card and was wondering how my credit score would be affected if I applied for several of these cards.

The post below is by RJ Weis at Gen Y Wealth.  He applied for several cards and tested the impact on his credit score.  What do you think happened?  The results were surprising! Read below:

The Impact of Travel Hacking on Your Credit Score

by RJ on May 15, 2011

The last time I checked my credit score, it was at 717. That was on June 12, 2010.

Since then, I have applied for 4 different credit cards. The purpose for applying to each of these cards was to earn free miles.

The four cards I applied four earned me 200,000 miles. That’s good for 4 round trip tickets to many international destinations.

So how did this impact my credit score?

Let’s find out.

Last time I checked my credit score, I did so using MyFico. Now it costs $20 to get a credit score at MyFico, so instead I’m using Equifax. You can view your FICO® score through Equifax for $15.95.

I’m happy to report that my credit score as of 5/13/2011 is 752. An actual increase!

Why did it go up? I can think of a few reasons.

  1. I only had one credit card before, so more credit cards improved my utilization rate.
  2. I paid all of my bills on time.
  3. I didn’t apply for many credit cards all at once. Although, I’m not entirely sure if this helps or not.

One of the biggest assumptions about travel hacking is the negative impact on your credit score. Everyone’s credit situation is different and nobody knows exactly what goes into this calculation. However, my point is that you should always test assumptions. Many times, they’re incorrect.

Stocks are still on sale, BUY, BUY, BUY!

Yes, that’s right, I said it, stocks are still on sale. My ROTH IRA (Individual Retirement Account) earned a 15.95% increase from March 2010 to today.  Most of the increase was due to the overall stock market doing better. During the recession, stock prices crashed hardcore.   Two things determine stock prices:

  • Fundamental value of the company: company’s annual profit, upcoming products/services, and the cash you’d make by selling all the company’s assets
  • Perceived value by investors: people’s opinion of how well a company’s going to do in the future

During a recession, the fundamental value of a company changes some and the perceived value changes A LOTPeople worry that the economy won’t recover and forgot that recessions happen periodically. They see their investment balances dropping fast, become terrified, and sell their stocks.

Stock prices continue to drop until people feel comfortable investing again.  This is the best time to buy!  It’s a sale.  

Stock prices in a recession resemble a post-Christmas sale—which are the lowest prices of the year. (When else can you buy a $300 Banana Republic jacket for $15?) Think of a recession as a surprise sale (a cyclical discount on stocks).

If you have extra cash now, buy! If you don’t have cash, get ready for the next major sale. It will happen. We’ve had 4 recessions since 1982 (Dec 2007 – June 2009, March 200 1- Nov 2001, July 1990 – Mar 1991, and July 198 1– Nov 1982).

During the next recession when everyone else is running out of the market, we’ll come in with buckets of cash, buy stocks on sale, and bolster the economy!  Ha, buying during a recession helps you and helps the national and world economy! Call that my community service message for the day.

——————

Have you been investing during or after the recession? If not, are you thinking about getting in? Share your experience!

We meet in an elevator. You’re stoked & ask for book recommendations . . .

We both walk into an elevator, and my name tag says, “Yvette Owo.” Suddenly, you’re excited! You love Financially Fab and meeting me is 2nd only to meeting Lady Gaga.  (Okay, maybe this is a fantasy of mine.  😉 A girl’s gotta have dreams.) After you get an autograph for yourself, best friend, and future children, you ask for book recommendations.  I recommend the following:

On Personal Finance

If you only read one book on Personal Finance in the next few years, choose one of these:

On Long-Term Investing / Mutual Funds

 If you only read one book, choose any of these:

 

On Beating the Market

If you want to beat the market, read all of these books before making the first trade, opening up a brokerage account, or otherwise throwing your cash into a crapshoot.  If you’re not willing to read just 4 books, you should get out of the game. If you still want to beat the market after reading, go for it! Track all your trading costs, losses, and gains.  In 10 years, if made any money, let me know!  I’ll be surprised and happy for you!

 

 

 

    

Losing weight rocks, paying for a new wardrobe doesn’t!

 

Challenge of replacing my wardrobe

From last Feb. to August, I dropped 3 dress sizes.  At first it was easy to transition my wardrobe by pulling out clothes that used to be tight.  After awhile, even those were too big.  I thought, I could spend money and time scouring stores, or I could delay buying new clothes as long as possible.   Then I ran the numbers for buying 2+ months of work clothes while mixing in a few pieces I already owned.

Work Clothes Price
2 Suits  $           300
7 Dresses  $           350
2 Pairs of pants  $           120
6 Tops  $           150
3 Sweaters  $           120
2 Belts  $             60
Total for work clothes     $       1,100

 

 

 

 

 

$1,100 for 40+ days of fab outfits from BCBG, French Connection, Banana Republic, Marc Jacobs, Ann Taylor, and others designers is a bargain, but that’s still $1,100 gone forever!  And that’s just work clothes. My play wardrobe would be a few hundred more.  Rather than hand over a chunk of cash when I may still drop sizes, I decided to delay shopping.  I’d have more time for fun stuff—like this blog—and money for traveling, where I could show off my new body on vacation.

 

Be creative with styling  

I challenged myself to delay shopping by creating new looks until I ran out of clothes.  I thought it would last a month, a month-and-a-half tops.  Instead it worked for 9 months, from March until November.   

 

Use scarcity to increase creativity  

Instead of buying new clothes, I became more creative with styling, using belts and jackets, and mixed pieces I wouldn’t have dared to before.  I bought a few belts a month ($200 total) in several colors—yellow, black, red, brown, blue—and textures—polished leather, cloth, and satin—to create empire-style dresses or a regular waist line on pants & skirts.   Sometimes, a long, loose skirt became a dress, if I used a wide belt to create an empire waist. Pants with a loose waist looked polished and elegant with a wide belt cinching me in.  I wore suit jackets out dancing on Sat. nights with tube top dresses underneath.   Boyfriend sweaters made conservative work clothes trendier. I saved over $1,000 and got more compliments than before!  Many times I’d go to work thinking, “This outfit will be the last straw.  My manager is going to flip.”  Then I’d get tons of compliments.  Eventually, my team and most of the floor decided I was their resident fashionista. The irony is, avoiding shopping made me more fashionable because it pushed my boundaries and forced creativity.

Then I played around with food scarcity.  For a week, I’d cut all carbs except beans.  I now know hundreds of ways to eat beans (black, garbanzo, light red kidney, cannellini, great northern, etc) with salsa, chicken, fish, Asian sauces, basil, eggs, etc.  I also experimented with shrimp, potatoes, spinach, and much more.  

The scarcity experiments saved me tons of cash and taught me to trust my gut.  Overtime, I got better at pairing diverse items (clothing & food) to create something fabulous!

 —————————————— Your Turn! ——————————————

Have you ever done a scarcity challenge?  Interested in trying a fashion scarcity challenge?  How about going 60 days without shopping and seeing what creativity ignites?  What would you do with all the money and time you save by not shopping?   

 

How to live like a millionaire!

Imagine what your lifestyle would be like if you were a millionaire!

Do you imagine living in a mansion on the water or carrying a Louis Vuitton purse?

I recently read The Millionaire Mind and Stop Acting Rich, both written by

Dr. Thomas Stanley, a professor specializing in research on American millionaires.  His research spans 30+ years and profiles how millionaires actually live, compiling data  from thousands of surveys, focus groups, and one-on-one interviews.  You’ll be surprised that millionaires don’t have the flashy lives we see in shows like MTV’s Cribs.

Millionaires’ Cars

Of the cars recently bought by millionaires, which do you think was the most popular brand?

Range Rover?            

Top-of-the line Mercedes?

Porsche?

The correct answer is . . . Toyota!  Surprised?  “Most [millionaires] do not drive luxury makes of cars.”[i] “The median price paid by millionaires for their most recent [car purchase] was only $31,167.  The typical price paid by decamillionaires (someone with $10+ million in net worth) was $41,997”[ii].

Millionaire Dining

What do you think is the typical price millionaires paid to eat at their favorite restaurants, including tax, tip, and drinks?

$100?

$250?

$300?

The answer is . . . $19.59! “Only three-tenths of 1 percent [.003%] typically [spent] more than $100.”[iii] How much does dinner cost at your favorite restaurant?


Check out more millionaire stats:

Price paid for most recent haircut:

  • Female millionaires: $44.58
  • Male millionaires: $16.00[iv]

Cost of most recently purchased suit:

  • Typical Millionaire: $299.50
  • Decamillionaires: only $482! [v]

Millionaires typically don’t spend a large percentage of their wealth on clothes. When shopping, millionaires look for sales![vi] Millionaires—are frugal, allowing them to reinvest and grow their wealth.

Get involved!

How did the millionaire stats compare to your spending habits?  And your expectations? What surprised you the most?  What didn’t?

I’ll respond to all comments and emails!


[i]Stop Acting Rich, p. 203; [ii]Stop Acting Rich, p. 204; [iii]Stop Acting Rich, p. 156-157; [iv]Stop Acting Rich, p. 60 ; [v]Stop Acting Rich, 72; [vi]Stop Acting Rich, 73 – 74;

How the iPhone cost as much as a trip to Greece!

I love to travel and enjoy fashion, but electronics are not a big deal to me. I normally buy new gadgets when I need them and rarely because they’re new or sexy—except for the iPhone.
 

I succumbed to pressure from my new team at work and bought the iPhone. One guy, Brian, should’ve worked for Apple’s marketing team.  He was constantly thinking up new iPhone commercials.  For months, I heard teammates say—“There’s an app for that . . . . Check out this flashlight app . . . . The iPhone does this faster . . . . Google maps is much better on an iPhone,” and many more comments.  It felt like working in an infomercial! When Brian showed me how to hack into the iPhone to get internet access on my laptop for no additional charge, I was sold.  I bought the iPhone a few weeks later, justifying the purchase with the free internet.

1st Problem: Justifying Long-Term Costs with Short-Term Benefits

I justified an ongoing, long-term cost—monthly plan and maintenance to the iPhone— with a temporary benefit.  Apple would eventually block the hack, which they did a few months later. Once I couldn’t use my iPhone to get internet on my laptop, I lost my main benefit and was stuck with the ongoing costs. Long-term costs should only be justified with long-term benefits; otherwise, when the short-term benefits are over, you end up stuck with all costs and none of the value.

2nd Problem: Maintenance Costs were too High

I dropped things, and often. The iPhone was the most delicate phone on the market, due to the large glass screen.  After having the iPhone for 8 months, I accidentally dropped and broke it, despite using a heavy duty case. Apple charged $295 for a replacement iPhone and wouldn’t lower the cost by allowing me to downgrade to older version or one with smaller memory.

Final Solution: Change phones & providers!

I had 2 options—sink another $300 into the iPhone, for a total of $1,725 annually, or move on to another phone. The chart below explains why the iPhone was so dang expensive!


How the iPhone cost as much as a trip to Greece!
First iPhone * $350
Yearly Costs for Cell Phone Plan: $90/ month for 350 minutes, texts,and iPhone data plan $1,080
Yearly cost before breaking phone $1,430
Replacement iPhone $295
Total 1-Year Cost for iPhone $1,725 !!!!

For someone that’s not into technology and would rather spend that money traveling, it didn’t make sense to throw more money at Apple or AT&T.

I changed to Sprint, where I got more minutes and unlimited texts for $20 less per month and got a HTC Hero with Android apps and a touch screen for $179 after the rebate.  Get this—paying the early termination fee and buying a new phone was only $14 more expensive than getting a replacement iPhone.


How cheap it was to switch to Sprint
AT&T Early termination fee $130
Cost of HTC Hero after rebate $179
Total cost of switching to Sprint (just $14 more than replacement iPhone) $309

The Sprint plan offers more minutes, unlimited texts, and costs $240 per year less than AT&T—just enough for a plane ticket to visit my best friend in Seattle!

The iPhone was the best phone on the market.  But did I need the best phone? Nope! Just one that fit my lifestyle.


If I had bought the replacement iPhone, I would have spent over $1,700 on my cell phone!


$700 saved on cell phone pays for roundtrip international flight!
iPhone HTC Hero Difference
Phone $350 $ 179* HTC Hero was over $170 cheaper
Monthly Plan $90 $   70 Sprint $30 cheaper monthly and fewer dropped calls
Yearly costbefore breakingphone $1,430 $1,029 HTC Hero/ Sprint was $400 cheaper
ReplacementPhone $295 $0 HTC Hero was not as delicate and was unlikely to break
Total 1-YearCost $1,725 $1,029 Saved about $700! Cost of international flight!

For some people, almost two grand was worth it. If you prefer electronics and can afford the iPhone after savings and bills are paid—then go for it!

As I said in the beginning of the post, I’m not into electronics. If I had two grand to spend, I’d rather travel or shop.  Spending according to my values meant changing from the iPhone to a cheaper phone and having more travel money!

———

What new item did you purchase because your friends, family, or coworkers influenced your decisions?  Did the new purchase match your values?

Try adding up the total yearly cost. With the yearly cost in front of you, ask yourself if the item is worth that much?  Would you rather spend that cash on something else?

* Although I bought cases for both phones, the cost of 2 iPhone cases and 1 HTC case was not included in the calculations.

 

Do you really save when you buy discounts?

I was thinking about Black Friday and how hundreds of people camp out overnight to get massive discounts, such as 60-inch flat screen LCD TVs for $150, 70% of laptops, and buy 1 get 1 free digital cameras. Most people go through the hassle of waiting in line and waking up before dawn, so they can save money.  But, do they really save?

My questions to you are: When you buy things on sale, does that mean you’re actually saving money?   Do sales really help you keep more cash in your bank account?

What do you think?

Think about it . . .

A little bit more . . .

Got a final answer?

Alright, time’s up .


My answer: Often discounts and sales actually hurt your bank account! Let me explain with a personal example.

A few years ago, I went into Banana Republic to buy a winter jacket during the after Christmas sale.  I planned to buy one item—a jacket for about $125.  The sales were better than expected! The jacket was marked down from $300 to $32! (You already know what happened next, don’t ya?) I bought more stuff, for a total of 1 jacket, 3 pairs of pants, and 3 tops. The total cost was over $200. I walked out smiling about much money I saved.

But did I actually save money? Here’s the math:

Planned Actual Difference
# of Items 1 7 Bought 6 impulse buys
Average Price per Item $125 $32 Average price per item was about $95 less than expected, due to great discounts
Total Price $125 $225 Spent $100 more than planned, a full Benjamin gone from my bank account

I walked out happy and smiling because I bought 7 items on sale–1 that I needed and 6 that I bought on impulse.  I wasn’t thinking about the bottom line: My bank account was $225 poorer. Did I actually save money?  Was this actually a net plus to my life or finances? No to both!

I can’t tell you how many times I went shopping with the mentality that if I got discounts per item, I saved overall.  It took a while, but it finally sunk in–I save money only when my total shopping bill is less than planned or the extra items are things I needed. (Ladies, I mean need like food, water, shelter, etc. Not the way you “need” another pair of black pumps or a new LBD.)

By buying extra items I didn’t need, I wasted money.  I could have bought just the jacket, and had about $195 to spend on something I really valued.  (Like 3 -4 nights at a hotel in Greece!) Store owners are smart.  They get us in the door with sales, hoping that we’ll buy more overall. 😉

Proving the point that impulse buys often waste money, I rarely wore the 6 impulse buys and no longer even have them.  The jacket, which I needed, has lasted 4+ years, is still worn regularly, and is hanging in my coat closet right now.

Now it’s your turn: When you get discounts, does it feel like you saved money? Even if you spent more overall?

Testimonials

Testimonials for Financially Fab’s Personal Finance Consulting

I created a Personal Finance Program targeted for us–young, professional, women.
It is a comprehensive, end-to-end financial management program in just 5-sessions.  Each session has specific goals, so you accomplish a lot & quickly!
By the end of the program, you will have a:
  • Personalized plan for meeting short- and long-term goals
  • Simple, automated system for managing finances in just 30 minutes per month
  • Optimized credit and checking accounts to lower fees and rates while increasing freebies
  • Financial system and budget designed for your lifestyle
  • Complete plan for 401K, IRA, and other investments

Here’s a testimonial from Sabina, who took the Financially Fab Personal Finance Program.

“To capture where . . . I am now, I would use the word ‘confident’. Your advice helped me realize how easy it is to get a basic understanding of my financial situation, both near- and long-term, how to think about my financial goals and how to take the steps to meet them. I’m no longer . . . afraid of that! And I know now that any time I have a question, all I have to do is ask (i.e. call the bank). But of course it’s also nice to know that I can always call you!

You definitely explained things clearly and turned managing my finances into something interesting and fun, rather than confusing and dreadful. Perhaps what I appreciated most of all was your . . . encouragement. That made the sessions fun and helped me feel confident.”
— Sabina


Here’s a testimonial from Sonny for Credit Card Consulting.

After hearing Yvette’s experience with keeping a high credit score,I decided to take my credit score into my own hands! I called my credit card company and got a 200% increase in my credit limit. I’m not going to increase my monthly spending, so I’m using a lower percentage of my credit- which improves my credit score! Thanks, Yvette!
—    Moshe

About Me – Why I’m Doing This

Thanks for checking out Financially Fab.  Here’s background on why I’m doing this.

My Passion

I’m passionate about helping middle class people hold on to their money. I want you, me, everyone, to confidently make savvy financial decisions. To make those savvy decisions, you need information that makes sense for you, right now. I started Financially Fab to offer sound, timely, information for your life, speaking your language as young professionals. This is not your parent’s website.  I use examples from my life and the lives of other young professionals.

Financially Fab is about helping you and creating a safe space to learn about personal finance, especially if you’re starting from scratch.  I want you to ask questions! Write comments! Email me at FinanciallyFab at Gmail . com. I respond to all emails and comments.  And if you’re really shy, write an anonymous comment. 😉

The Beginning

When I was 18, my parents divorced, kick starting my current views on personal finance.

I was born in Nigeria and moved to the US at age 6 with my family. My parents moved halfway across the world, leaving family and friends, partly so their kids would never worry about money. Like a good immigrant daughter, I was expected to get outstanding grades, go to a good college, get a professional masters or PhD, and pursue a professional career.  I followed that plan and willingly handed over my financial life. I expected them to manage my finances behind the scenes until I finished grad school. 

During the divorce, finances became more transparent. My college tuition, housing, and other expenses got thrown into their arguments.  In an 8-month period my mom took full financial responsibility of her 3 kids, got divorced, and buried her father.  I was very close to my mom.  I saw firsthand how money touched all areas of our lives—funerals, education, Christmas holidays, relationships, and lying awake stressed each night. I’m sure my parents, like all others, experienced financial worries several times during my childhood. But this was my first time seeing the details.

I was almost Kicked Out of College

On my end, I kept spending like nothing had changed. I had less cash each month and was using more credit, but I wouldn’t admit it to myself. For example, I hoped that $1,000 dollars in my account would stretch to pay for $700 in rent and bills, $200 in food, $200 in shopping, $150 in other random expenses.  I was stressed.  Seven days before spring semester started, I didn’t know how I would pay for tuition.  If couldn’t pay, the university would drop my classes—I would be kicked out of school.

That woke me the hell up. I got a short-term university loan.  I asked myself how I could spend $5,000+ shopping and studying abroad, but didn’t have $3,500 for tuition. I was spending money like it grew on trees.  I realized it wasn’t mom’s or dad’s problem. I was accountable for my finances.  It was my life, not theirs. That spring and summer, I dove into personal finance, reading about mutual funds, budgeting, efficient market theory, consumer debt, etc.  I also started budgeting, got a federal student loan, worked part-time, and paid off $5,000+ in credit card debt within 5 months.

Starting my Financially Fab Lifestyle

For the rest of college, I increased my financial control, using a combination of support from both parents, loans, part-time work, and scholarships.  While still in college about two years later, I had a 6-month emergency fund and opened an IRA with $4,000.

Over time, the sense of control expanded to other areas, including choosing the job I wanted, moving to my 1st choice city, picking up ballet as an adult, and travelling the world.  I became Financially Fab.  I became accountable for my decisions, worried less, and enjoyed more.

Realizations that Changed My Life Forever

  • If I don’t prioritize my spending, I could lose what really matters–in this case, my education.
  • When I take ownership of my finances, I sleep better.
  • I worry less when I have an emergency fund.
  • Going forward, I will be 100% accountable for my finances, the good and the bad.
  • I will never blame someone else for my spending decisions.
  • I am in control of my life.

Ready to take control of your life?  I’m here to help. Wanna dive in? Check a post and post comments!