Over the years, I’ve developed a few strategies that allow me to indulge my fashion passion and still manage to stay current on credit card bills, invest and save money. It’s all about stretching those dollars to stay within budget. You do have a clothing budget, don’t you?

Here are my top five strategies for smarter clothes shopping:

(I like to support the local economy, so most of the retail establishments mentioned below are in the San Francisco Bay Area. But most metropolitan areas will have similar venues—you just have to go out and find them!).

Strategy #1: Take a cue from chic French women and maintain a small but high quality wardrobe. Artfully use accessories to create different looks.

How? Find designers and shops that suit your fashion sensibility. Patronize these places—buy less, but buy what you love. As an added bonus, if you become a loyal customer, you’ll be invited to special sales and sample sales. My personal favorites:

FIT: www.fitclothing.net. FIT is a small clothing boutique in the Rockridge district in Oakland. Joyce Gardner, the owner, carefully curates her stock to satisfy her local clientele. She carries selected labels such as Schmacher, Cop Copine, Yoshi Kondo, Diane Von Furstenberg, Three Dot, Velvet by Graham and Spencer, and Pete. She packs a lot of style in a small space and her employees are adept at pulling looks together. She holds special sales and gives first dibs to her best customers.

Catherine Jane: http://catherinejane.net. Catherine Jane is a San Francisco designer who has an eye for gorgeous fabric and fit. She creates wonderfully feminine clothing with her own unique flare that will flatter your figure. Tip: Her sample sales are full of outrageous bargains.

The reward for buying high quality, timeless fashion is longer wear and thus less money spent over time.

Strategy #2: Find consignment shops whose buyers are very picky and who echo your style sensibility.

Yes, these are pre-owned and pre-worn garments. If you don’t have a problem with that, it’s a great way to add pieces to your wardrobe at good prices. Here’s how consignment shops work: Women bring in their current, gently worn and seasonal items and the store buyer selects which pieces work for her store. Then she splits the sale price with the seller, usually 50/50 or 60/40. Prices are generally 1/4 of retail prices.

My personal favorite consignment shop is Mirabel (3251 Lakeshore Ave, Oakland). This store is full of fashion gems. You will find labels such as Marc Jacobs, Burning Torch, Velvet by Graham and Spencer, Diane Von Furstenberg, Prada and Missoni as well as a carefully edited selection of Banana Republic, J. Crew and H&M. Occasionally there will be truly great finds (like an Isabel Marant leather jacket I found recently).

Added bonus: If you don’t want to buy, you can always sell clothing that is gathering dust in your closet.

Strategy #3: Find a fashion stylist to audit your closet and help you shop.

If you love clothes but hate to shop or feel like you make a lot of expensive buying mistakes, hiring a personal stylist may be the perfect solution. She can save you both time and money and you’ll look great with minimal effort.

Great Find: Urban Darling. www.urbandarling.com

Stylist: Lisa Deane. www.urbandarling.com/stylists/lisa-deane/

For more tips on working with a stylist, check out my previous post, “Save Money By Shopping in Your Own Closet with a Wardrobe Stylist.”

Strategy #4: If you don’t like going to shops, bring the shop to you!

There are clothing lines that are sold only in private venues. If you host a party, not only do you get to invite all your friends, you receive 50% off your items depending on how much others buy. Personally, I like the CAbi (Carol Anderson By Invitation) line. And my favorite CAbi consultant is Erin Saul who lives in Oakland.

Great Find: CAbi. www.cabionline.com/

Strategy #5: Use the Internet to find sales on items you crave.

You see a gorgeous pair of shoes at Bloomingdale’s. You can’t afford them. Go home and do a Google search using the specific brand name, style and color. You may find that the shoes are on sale somewhere else. In addition, you can ask retailers to match prices if you find them lower on-line. Don’t be afraid to ask.

I think these five strategies will give you a good start on smart clothing shopping. But, if your closets are bulging and think you might have a shopping problem you may need another kind of help. Jill Chivers, a former shopaholic, has created the “My Year Without Clothes Shopping” program for people like you. Her program offers a fun and safe way to “break the cycle of unconscious and compulsive shopping” and to be more in control of your money. Check out her website: www.myyearwithoutclothesshopping.com

I would love to hear of any tips or strategies you have to be stylish without breaking the bank. Please share your thoughts!

Market correction: refers to a “mini-bear”  market which isn’t expected to turn into a long-term bear market (down market), but it can be a predictor of worse to come. The phrase “it’s just a correction” is commonly heard when markets are dropping (by 10-20%) – but this is a best guess at the time and only future stock market activity can determine the true outcome.

Double-dip: no, it isn’t your stomach doing a flip-flop when the Dow plunges over 500 points in a day. The term refers to a double-dip or W-shaped recession where the economy emerges from a recession, then goes on to a brief spurt of growth but then falls back into a recession.  We don’t know if we have double-dip yet – it’s too soon to tell. The Great Recession which lasted from December 2007 through June 2009 was the worst since WW II. A recession is identified by a long period of falling activity visible in real GDP (Gross Domestic Product) growth, falling employment, income and production.

Bear market: a declining stock market over a period of time and some say defined  as a  price decline of 20% or more over at least a two month period.
New to me:  this market trend is also referred to as a “Heifer Market!”  Bear markets usually accompany recessions and periods of high unemployment or inflation. The bear market that coincided with  the Great Recession started with the Dow at 14,164.43 on October 9, 2007 and ending on March 5, 2009 at 6,595.44.

Bull run: refers to a  “bull market” which is a rising stock market over a period of time. The last bull run started in March of 2009 when market pessimism reached its lowest point. To be determined is whether the market drop of last week is “just a correction” during a bull run,  or the start of a new bear market.

Non-farm payroll report: an employment report released  by the U.S. Bureau of Labor Statistics on the first Friday of every month. It heavily affects the U.S. dollar and bond and stock markets when it is released. Last Friday’s report was the one bright spot in a bad week when it was announced that the U.S. economy had added 117,000 jobs in July – higher than expected. From 1939 to 2010, non-farm payroll averaged 116,870 jobs reaching a high of 1,114,000 in September of 1983 and a low of -1966 jobs in September of 1945.

S&P’s AAA rating vs. AA+ rating:  Friday, August 5,  Standard & Poor’s took the unprecedented step of lowering the top credit rating for U.S. long-term debt (notes and bonds that come due in more than a year). A downgrade is basically a warning to buyers that there is an increased chance (however slight) that they won’t get their money back and in theory should lead to higher borrowing costs for the government as investors will want to earn a higher interest rate for the increased risk. The 10-year Treasury note is considered the basis for all other interest rates so higher rates on it could mean higher rates on everything from mortgages to car loans, to borrowing costs for state and local governments and companies.

But it’s not clear that S&P’s downgrade will have an effect on rates. Treasury securities are still considered one of the safest investments in the world. As stocks plunged the last two weeks, the price of Treasurys soared because demand was high, even though investors knew there might be a downgrade. Since yields on debt securities fall as prices rise, the yield on the 10-year note dropped from 2.96 on July 22 to 2.39 on Friday.  The reality is that no other market is as large or as liquid as the U.S., even though it has its own set of problems.

The next weeks and months will determine whether the bull or the bear prevails and whether fiscal or monetary policies are instituted that redirect the U.S. economy (and yes, I will explain fiscal and monetary policies in a future Finglish tutorial). Stay tuned for “Finglish” tutorial #3.

?

The reality is that financial and economic terms are confusing—and not just to non-finance types. Plus, new financial terms crop up all the time to label or explain a new product or strategy (QE2 anyone?). It’s enough to make anyone’s head spin.

Since the news is particularly ripe with financial terms right now (due to the dismal state of the U.S. economy), I’ll take a stab at explaining some commonly used examples of “Finglish.” Hopefully, this will increase your financial knowledge, or, at the very least, prevent your eyes from glazing over the next time you read “yield curve.”

Federal budget deficit: This term is in the news constantly and for good reason—the federal deficit is huge at $1.4 trillion. This means that the federal government is spending $1.4 trillion more than it is earning in revenues over a year. Why? Because entitlement spending, interest paid on the national debt and defense spending are much greater than revenue from taxes. And when the economy is weak, as it is now, tax collections are down.

Entitlement spending: Another ubiquitous concept, entitlement spending refers to Social Security, Medicare and Medicaid outlays by the government. Even though we pay into this system during our working years, with rising costs of healthcare and longer lives, much more goes out than comes in. Our country’s leaders know that entitlement spending has got to be cut to fix the debt problem, but it’s a political minefield, and things will probably not change much until after the elections of 2012.

National debt: The amount of gross federal debt outstanding is an unable-to-imagine $14 trillion. The national debt increases or decreases based on the annual federal budget deficit or surplus. But a surplus has not been seen since 2003 and the deficit is now growing at a rate of $1 trillion a year. Together with the budget deficit, this debt was one of the reasons Standard & Poor’s gave when downgrading the United States’ credit outlook to “negative” on April 18, 2011.

Debt ceiling: The federal government is limited by law as to the total amount of debt it can issue. This limit is known as the debt ceiling. Currently the debt ceiling is $14.3 trillion, an amount that was technically exceeded on May 17. Fortunately, the government can continue to operate and pay its obligations through various accounting mechanisms and Congress will mostly likely vote to increase it.

And finally, quantitative easing (QE). This is a tool in the Fed’s arsenal to help the country out of a recession when all else fails. This is also referred to as “printing money.” The Fed tends to use QE when interest rates have already been lowered to near 0% levels (as they are now) and the economy doesn’t improve. Quantitative easing increases the money supply by flooding banks and other financial institutions with capital in an effort to promote increased lending and liquidity. The downside is that this could lead to inflation as there is still a fixed amount of goods for sale (too much money chasing too few goods leads to higher prices and inflation). The Fed will complete QE2 in June. There is much controversy over what effect this will have on interest rates, Many economists expect them to rise, causing another set of issues for the economic recovery.

This would be a good time to explain “yield curve” because when the Fed expands the money supply it also has the effect of lowering interest rates further out on the yield curve.  But I think this is enough of a Finglish tutorial for one blog post—I just know your eyes are glazing over. Stay tuned for the next Finglish lesson. I plan to write at least one blog post a month on the topic!

Economists call the U.S. type of deficit a “structural deficit” because it isn’t temporary; the U.S.government habitually spends more than it takes in. Imagine if you ran your own personal finances this way. It would mean you spend more than you make each year and never pay your debt off—it just grows. Your creditors wouldn’t allow it and bankruptcy would surely be the outcome.

In The Ten Trillion Dollar Gamble: The Coming Deficit Debacle and How to Invest Now, Russ Koestrerich takes on this issue in straightforward prose that even a person unfamiliar with deficit economics can understand. In the first few chapters he explains the what, why and how of the U.S. deficit problem. He attributes the large and growing deficit to entitlement spending: revenue spent on Social Security, Medicare and Medicaid, compounded by our politician’s unwillingness to take action to reduce and control this spending. Koestrerich’s premise is that the largest pieces of the deficit pie, entitlement spending, along with the interest expense on existing bonds and defense spending, are politically untouchable. No politician wants to be voted out of a job.

Koestrerich concludes that the deficit isn’t going away and the result will be higher interest rates, slower economic growth and inflation.

In Chapter 2, Koestrerich explains why this matters to you—why slower growth, higher interest rates and inflation will dramatically affect the U.S. standard of living. As more government spending goes to paying interest on the debt, there will be less spending on more productive areas, such as job creation, education and infrastructure. Taxes will inevitably rise as a way to fund the deficit, hurting business and households alike. Higher deficits lead to higher interest rates on government debt which then extends to higher rates on consumer loans such as mortgages, auto and student loans. And in the worst outcome, inflation will start to rise, and each dollar will buy less goods and services, stretching already tight household budgets to a breaking point.

If you believe in Koestrerich’s worst case scenario, then Chapters 5 to 9 are for you.In them, he outlines investing strategies that can potentially protect your capital and make money in a deficit-run economy:

Bonds:

• Reduce bond holdings, particularly U.S. Treasuries.
• Focus your bond portfolio on shorter maturities.
• Build bond ladders.
• Raise allocation to municipal bonds.
• Favor corporate bonds over government bonds.
• Add international (including emerging market) bonds to your portfolio mix.
• Add TIPS (if held to maturity).
• If you need income, look to preferred and dividend paying stocks as bond substitutes.

Stocks:

• Increase your exposure to stocks outside of the U.S.
• Favor regions with better growth prospects and less debt, i.e. Canada, Australia, Germany, Hong Kong and Singapore.
• Own stocks in countries that produce commodities, particularly energy, i.e. Canada and Australia.
• Focus on U.S. companies that are large exporters of goods or services.
• Give more weight in your portfolio to emerging markets, i.e. Brazil.
• Overweight stocks that are more resilient to rising rates such as technology, energy and healthcare and own less in utilities, financial and consumer discretionary stocks.

Commodities

• Allocate a percentage of your portfolio to a broad commodity basket and gold.

Real Estate

• Buying a larger home, a second home or some commercial property is a good strategy in the event of higher inflation, but buying REITS is not.

Koesterich does an excellent job of describing the ways to invest in these different asset classes and the book is a useful investment primer. He explains his recommendations in just enough detail and again, in prose that most investors can understand. I would recommend this book to anyone who wants to get a deeper understanding of our current economy and ways to invest, whether you believe we are on the road to a deficit debacle or not.

Note:  This book was provided to me free of cost by McGraw-Hill. Any investment strategies discussed above are not recommendations. Consult your financial advisor or conduct your own due diligence to ensure investments are appropriate for your risk tolerance and investment timeframes.

Many of these investors are just ordinary folks who pay their bills on time, have good credit scores and would no more consider defaulting on a debt than they would stop brushing their teeth every day! But “walking away” is now on their short list of options to consider.

“Walking away” – also known as voluntary foreclosure or strategic default – occurs when a borrower decides to stop paying a mortgage even though they can still afford the payment. Why would someone consider such a controversial course of action? Because of the following unfortunate circumstances:

• Market values are way less than the mortgage balance (often referred to as being “underwater”).
• Refinancing to current lower rates is not an option due to lack of equity.
• Experiencing negative cash flow (rents are not covering expenses) each month.
• Selling isn’t an option with prices as depressed as they are, without bringing in cash to close.
• Difficulty raising rents in current economic environment.
• No clarity on when real estate market values will recover.

You’ve heard the expression “throwing good money after bad”?

What Happens if You Walk Away?

When you walk away from a mortgage, your credit score will drop. If you have a secure job, own a home with a decent mortgage loan or are happy renting, you may not need a mortgage loan for many years. But if you do plan on buying a home, it will be up to seven years before banks will lend to you, and you may be required to make a bigger down payment or pay higher interest rates.

You will also need to deal with your tenants. Fortunately, their rights are protected by the “Protecting Tenants of Foreclosure Act of 2009.” This legislation requires the new owner to let the tenant stay at least until the end of the lease; month-to-month tenants are entitled to 90 days notice before having to move out.

If you live in California (laws vary by state), as long as you first mortgage is a purchase money loan used to buy a one- to four-unit residential property, you won’t have to worry about  the lender coming after assets other than the property itself. Anti-deficiency statutes exist that protect borrowers in non-recourse states. The same protection doesn’t exist for refinanced loans. In either case, banks in California rarely go down this path due to the time and legal expense involved (at least for now).

If you took out an equity line or HELOC and it was used to buy the property, then it is also considered a non-recourse loan. Otherwise, most equity loans and HELOCs are recourse loans and you will be personally responsible for paying them back after the foreclosure. The lender can pursue you for a deficiency balance.

Under federal law, a lender must report to the IRS any forgiveness of debt in an amount larger than $600. So, as a real estate investor, you will owe tax on the amount of debt forgiven.

There is some “good” news: If you aren’t a professional real estate investor and you have owned the property for several years, it is likely you have accumulated capital loss carryovers. You will be able to deduct those losses from your taxes in the year of the foreclosure.

Two Sides to the Moral Dilemma Debate

Since 2007, the rate of foreclosures has sky-rocketed, and there is no end in sight. A national debate has ensued regarding the decision to walk-away. One side believes that underwater property owners are acting in their financial best interest to walk while the other believes it is shameful and unacceptable.

No matter which side you are on, the decision to stop paying your mortgage is not one to be made lightly. But it’s one that any financially intelligent person would consider with the right circumstances. The most prudent course of action is to get educated, understand all of the repercussions as thoroughly as possible, consult financial professionals as needed, and make a well-thought out decision for yourself and your family.

I know you don’t understand why I abandoned you right after you got such a gorgeous face-lift (thanks to Stephanie Sammons of WiredAdvisor.com, but it’s not your fault. You’ve never looked better. It’s just that I’ve been awfully busy helping clients with their finances, speaking about investments at the Commonwealth Club, attending conferences with the FPA, NAPFA and Morningstar and yes, I admit it, writing for other blogs. I think about you all the time and and feel terribly guilty that I haven’t visited. I know that when I don’t write for you, you lose fans that may never come back! I hope you will accept my apology and trust me when I tell you I will be back very soon.

In the meantime, I thought I would share those other blog posts I mentioned…just because there is some good stuff that readers Of Independent Means might enjoy!  But don’t worry, you’re the only blog for me!

Blog post for the Morningstar Advisor Markets & The Economy Blog: A Quick Trip Around the World with Ian Bremmer. Ian Bremmer is a brilliant political economist who has written several books. He gave a talk based on his  latest book: The End of the Free Market: Who Wins the War  Between States and Corporations at the FPA conference in Denver. Some of his insights and predictions are shared in this post.

Sharp Talk for the Sharp Skirts Blog. Sharp Skirts is a knowledge network focused on helping women entrepreneurs. This blog post is about how women can become better managers of their finances.

Blog post for the San Francisco Bay Area Women’s Journal: Personal Wealth: How To Handle A Financial Windfall. The San Francisco Bay Area Women’s Journal is an online lifestyle  magazine for savvy women founded and edited by Debbie Josendale.

See you soon,

Sincerely,

Cathy Curtis

So many books, so little time.

Married (happily) With Issues takes the reader along on a fascinating and personal journey in search of a more perfect union. Elizabeth Weil manages to convince her good sport of a husband, that even though their marriage is “good” they might benefit by attempting to make their good marriage better through various counseling and therapy strategies.

In the story, Weil discussed some of her peccadilloes (she doesn’t like French kissing) and his (he’s overly obsessed with cooking gourmet meals every day) that chipped away at their otherwise good marriage.  After I read the article, I remembered that my husband had “suggested” an idea that he thought might lead to a more perfect union between us. I might want to “review my magazine collection” he said, in the hope that some of them could be recycled, “before they took over the house.”

I know my magazine habit is a pet peeve of his…and the article triggered my unconscious and motivated me into action. It’s hard for me to discard my beloved magazines: The New Yorker, More, Gourmet, Sunset, Good, California Home & Design, and Cook’s Illustrated all hold for me hours of pleasurable entertainment.  But, because I knew it would be good for my marriage, I threw out everything but the 2009 issues.

Would I have agreed to purge my magazine collection if I hadn’t read about one couple trying to build a better marriage? Probably not. Could Elizabeth Weil have become a writer or a well-informed, always-trying-to-improve-spouse without reading? Probably not.

Reading is so important. One of the most powerful advantages to being an avid reader – you not only learn so many new and interesting things, (“Hey, let’s try and make our already good marriage better!”) reading has the power to change your behavior in positive ways. Reading can even help you think about, manage and handle money better!

My Personal Finance Reading list
This brings me to my list of favorite personal finance books -  guaranteed to change one or two of your money behaviors the first time you read them and more if you read again and again.  Just give some of these books a try and see if you start gaining money smarts!

1.   I Will Teach You To Be Rich, Ramit Sethi.  Meant for a 20-30’s audience this book is full of tips about how to live within your means but enjoy the things you love, and how to automate your finances so that saving and investing are on auto-pilot.

2.  Your Money or Your Life: 9 Steps to Transforming Your Relationship with Money and Achieving Financial Independence: Revised and Updated for the 21st Century by Vicki Robin, Joe Dominguez, and Monique Tilford.  Do you ever feel like you are spending money on things you don’t even really care about but buy anyway?  This book really makes you think about the value of your time and money and helps you to align your values with your spending.

3.  Get Financially Naked: How to Talk Money with Your Honey by Manisha Thakor and Sharon Kedar.  An inspiring, practical guide that will help you to talk about money with your partner and create a successful financial life together.

4. Your Complete Retirement Planning Road Map: The Leave-Nothing-to-Chance, Worry-Free, All-Systems-Go Guide, Ed Slott.   Ed Slott is the guru of retirement planning and his books will teach you everything you need to know about 401k’s, IRA’s pensions, etc.

5. Making the Most of Your Money Now – The Classic Bestseller Completely Revised for the New Economy,  Jane Bryant Quinn.  A very comprehensive book covering all stages of your financial life. Discusses the pros and cons of major financial decisions.  (Buy the 2010 version, will be available soon).

Happy Reading!

First Lady Michelle Obama - stylish, and prudent!

You wrap your hands around your shopping cart and feel your heartbeat quicken as you enter the store. Your senses are heightened by that familiar junk-food aroma particular to Target. You take the long way to the work-out clothes department. You want a quick peak at the women’s clothing.

You suddenly remember that Target’s latest clothing line is called “Mrs. O.”  It just hit the stores. You love Michelle Obama’s style. You might be able snag an item or two for next to nothing before everyone else does! And there they are! A yellow sheath dress – $34.99!  A teal knit cardigan – $19.99! A black patent cincher belt – $17.99!  Green kitten heels – 32.99!  A teal-yellow-green floral brooch – 12.99! All go flying into the cart. You finally make it to the athletic clothing section and snag some new yoga pants at $19.99 and two work-out bras at $8.99 each. Woo-hoo! Off to Costco!

At Costco, the smell of Polish hotdogs wafts across your consciousness. You make a bee-line for the paper goods section and load up your cart with bulk t.p, towels and facial tissue. You swing by the book section. “Costco always has such great prices on books. If I find a book I’ve been after..”

As luck would have it, The Necklace by Cheryl Jarvis is $12.99. Amazon had it for $ 17.76 – into the cart it goes. “Wow! I’ve wanted the French Laundry cookbook forever! Only $19.99!”  A no-brainer.

On the way to the check-out line, you taste the granola bar samples. “Hey, not bad! I can take these to work and hold off the morning hunger pangs. A 48-pack seems like a lot, but these might save me from pizza at lunch.” Thunk! Into the cart go forty-eight granola bars!

It’s two and a half hours later when you finally make your way to the check-out counter. You look at your overloaded cart and it hits you – most of this stuff you didn’t have on your list.

The rationalization process begins, but this time it’s different. You know you’re fooling yourself. Disgustedly you think, “Jeez, I just met with my financial planner last week. I promised myself I’d stay on my budget. WHAT AM I DOING???!!!!”

Your mother always taught you to put things back where you got them, but Mom isn’t here. She is taking a back seat as you feel overcome with self-disgust and panic. So what do you do? You abandon the cart!!!

You then climb into your car – the one with the back seat overstuffed with the hottest new items from Target’s Mrs. O Collection – and you drive right back to Target and you return every last item. Because from this day forward, you’ve decided you’re going to stay on budget.

Congratulations. You’ve taken some key steps to financial freedom. Pat yourself on the back!

Twitterize your business at the Sir Frances Drake Hotel / Sept. 23 5:30 pm!

Hi everyone! Public appearance alert. I’m honored to be part of a distinguished panel dishing about all things Twitter at a Women in Consulting event at the Sir Francis Drake Hotel. This is coming up soon and I wanted to make sure you know all the details.

What:   Tips, Tools and Tricks to Make Twitter Work for Your Consulting Business.
Where: Sir Francis Drake Hotel, Second Floor, 450 Powell St. San Francisco, CA.
When:  Wednesday Sept. 23, 2009 5:30 – 7:30pm
Who:    My fellow panelists are Nancy Friedman chief wordworker at Wordworking.com, and Irene Koehler, founder of Almostsavvy.com.

Irene and Nancy are leading lights in the Twitterverse so you really should attend to hear what they have to say.
Eats: Light appetizers.

If you would like to register for this event, please go here>> See you there!