Just in time to help with your goal-setting, here is a list of 12 simple steps you can take with your money in the new year:

1. Develop a habit of saving: It’s never too early or too late to start.

2. Build a budget that aligns with your values: Think about what makes you happy and then allocate your money accordingly.

3. Create a financial plan that reflects your most cherished goals: Think of it as a roadmap to happiness.

4. Invest the maximum amount that you can for retirement: You will need more money than you think.

5. Build and maintain a diversified investment portfolio: Don’t worry about finding the “best” investment.

6. Review your spending periodically to keep yourself on track: It’s the key to living within your means.

7. When it comes to investing, avoid the crowd … and tips from well-meaning friends and relatives.

8. Understand that volatility is a normal occurrence when investing in stocks: Keep a cool head and stick to your plan.

9. Know what your money is doing—look at your investment statements at least quarterly: Ignorance is bliss, but not when it comes to your finances.

10. Insurance protects you from the unexpected: It’s just smart to have enough.

11. Choose your advisors wisely: Find people you like, trust, and who will listen to you.

12. Spend on the things and experiences that make you happy: They make life worth living.

Challenge: Choose one of the simple steps as your New Year resolution for your finances and write a short (200–250 word) essay describing how you will put it into action. In return, you will receive a 12 Simple Steps to Financial Success 2012 desktop calendar (see here), and your essay may be included in a future blog post on “Of Independent Means.”

Happy New Year!

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!

Unfortunately, this “stuff” sells. The media is trying to capture as many eye-balls (and ears) as possible to maximize profits and the more provocative the content, the better. Some of the worst offenders are the most visible – talk show hosts or political analysts who get away with name- calling and worse, especially during political campaigns. The film has some clips of the likes of  Bill O’Reilly, Pat Buchanan and Rush Limbaugh spouting some nasty commentary in regards to women candidates. Who can forget the Hilary bashing during the 2008 campaign with much airtime about the tone of her voice, her hair and attire?

Imagine the impact on the younger generation in the U.S. who are continually exposed to these viewpoints? My friends and I, who are past the bloom of youth, reacted to the film similarly at first – so, what else is new? But we realized after some discussion that this documentary is an excellent wake-up call that all-is-not-as-it-should-be and that perhaps we should get over our complacency and be part of the solution.

After all, women have power. They make over 80% of consumer purchases in the U.S. – from soap to cars to houses. Women also control a lot of private wealth – $14 trillion at last count (out of approximately $55 trillion). Women make up 51% of the U.S. population. In contrast, within our most powerful institutions – media, government and business – female representation is shockingly low. Only 3% of women hold clout positions in the mainstream media, only 17% of seats in the House of Representatives and merely 3% of Fortune 500 CEOs.

How can women use their buying power and majority to help more women get promoted, elected and recognized? Wouldn’t it be great if instead of the explosive growth in cosmetic surgical procedures performed each year on American girls (more than tripled between 1997 and 2007) there was this kind of growth in the number of women in our legislative bodies? Wouldn’t our dollars be better spend on education instead of liposuction?

Becoming a conscientious consumer is one way to stimulate change. Some ideas:

• Buy products that support, instead of offend, your values.
• Select media (movies, television, games,magazines,books) that portray positive messages about gender.
• Support men and women political leaders with your vote and/or dollars who fight for the ideals you believe in.
• Go see Miss Representation! Bring the children and men in your life.
• Take the Miss Representation pledge.

“The most common way people give up their power is by thinking they don’t have any.”   Alice Walker

Related Links:
Blog post from Sally Around the Bay: “Money Honey”
Blog post from Small Change: when deju vu draws the same blank
Blog post from Tam Holland: The Week of Representing

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.

But it’s not only her unique voice. The book is organized in a very logical and helpful way. Each chapter, beginning with Chapter 1: The Small Business Checklist, has a To-Do List and Questionnaire to review before you read the chapter. At the end of each chapter is a complete list of resources to make it easy to get even more information and do research on the topic at hand. If you are short on time, you could get a lot of information by just reading these two sections. However, it would benefit you to read through the chapters. Rosenberg is a tax expert and there are many gems of tax wisdom contained in the chapters where you will find yourself thinking, “Oh, I didn’t know that,” or, “Great idea, I think I will incorporate that tax strategy into my business.” It’s a workbook, so get out a pen and take notes where needed!

The book is really a small business bible, not just a tax book. The chapter titles tell the story: Business Plans You Know and Trust; Entities; Record Keeping; Income; Common Deductions; Office in Home; Vehicles: Everyone’s Favorite Deduction; Employees and Independent Contractors; Owner’s Fringe Benefits, Retirement, and Tax Deferment; (the dreaded) Estimated Payments; Online Businesses; and Audits. Ms. Rosenberg really wants you to set up your business right, from the start, for growth and profit! And we all know that taxes play a big part in the outcome.

You can download worksheets from www.YourBusinessBible.com that will help you stay on track as you complete the tasks in the book. She provides a different password to the site each month that you can only retrieve by owning the book. Clever!

I plan to keep this book nearby as a reference for those questions I often get from my business-owner clients. And if you are a business-owner yourself – whether you’re just starting out or not –  This book is a must-read.

Please note: This book was provided to me free of cost by McGraw-Hill. Even so, this is an honest, objective review of the book!

Carol Moretti (seated) and Lisa Deane

In my living room sat an architect, a CPA, a healthcare executive, a innovation consultant, a marketing and branding expert, a retired attorney, a writer for the Huffington Post, a clutter coach, an interior designer, a home staging specialist, a jewelry designer, a technical writer, and a newspaper columnist. We were joined by an IT manager, a freelance interactive producer, an owner of a cooking-party company, an owner of a company specializing in culinary health education for kids, a development director, a yoga instructor, a marketing consultant, a personal fashion stylist, a trade marketing manager and a business student. All women. All interesting and accomplished.

Women are as diverse as any other group of people in their career choices and in their lifestyles. But women also share distinct attributes: They are great communicators, relationship builders and nurturers. They also share unique financial planning needs. For example, many women are concerned that they will be old and poor and alone. Look at these facts:

• Eighty percent of American women will find themselves the sole keepers of their personal finances at some point during their lives, However, most of those women feel financially insecure, despite controlling more wealth, having more education and being more involved in financial decisions.
• Women still make less than men make in similar occupations.
• Women’s careers are often interrupted by family needs, such as childcare and eldercare, which limits their opportunity for income and retirement savings growth.
• Many women fear losing everything and becoming bag ladies (and it doesn’t seem to matter how much money they have or make).
• Two-thirds of women over age 65 rely on Social Security as their primary source of income. Consequently, women are twice as likely as men to live out their golden years at or below poverty levels.

In my living room, we nibbled bites of grilled salmon covered in sesame seeds, ginger chicken, and artichoke frittata while sipping champagne cocktails. Everyone listened attentively to presentations on serious topics such as the 2010 tax relief act and the new healthcare law, but also to fun topics such as the top ten wardrobe essentials and how to save money on your wardrobe. In between speakers, we women did what we are great at: connected, made new friends and perhaps got a business lead or two.

About Cathy Curtis
Cathy Curtis, the writer of this blog and owner of Curtis Financial Planning, specializes in the finances of women, their families and their businesses. You can find out more about her on her website www.curtisfinancialplanning.com and follow her on Twitter @curtisfinancial, on Facebook Women and Money and on LinkedIn Women and Money.

Alison Covarrubias,Julie Abrams,Cathy Curtis,Ayesha Mathews-Wadhwa

It was my pleasure to moderate a panel of women who have made it part of their life’s work to help and support women entrepreneurs. Julie Abrams as CEO of Women’s Initiative; Alison Covarrubias as Co-Founder of The Hatch Network; Baat Enosh of  NCWIT and Women 2.0 and Ayesha Mathews-Wadhwa as a Director of Savor the Success.

We started our discussion by exploring the popular notion that women will “rule the world” and that the economic recovery will be largely led by females. We went on to discuss the challenges women face securing funding for their companies, the conflicts inherent to being a parent and running a company, and the unique circumstances that women of color face on their road to successful entrepreneurship.

The panelists agreed that a gender war wouldn’t do anyone any good, but that bias still exists. Until influential men become more balanced and realistic in their opinions about women’s abilities, change will be slow – particularly in the area of venture capital funding. The fact that so few women are partners at venture capital firms is a roadblock,  as people tend to invest in people they are most comfortable with and more women V.C.’s invest in women owned businesses.

On the positive side, studies indicate that women-owned businesses are run more efficiently, achieve a higher return and are focused on more than just the bottom line  – usually with an additional mission benefiting the greater good in some way. The current recession may be the catalyst that women need to be recognized as leaders with unique qualities that are necessary to gain an edge in our increasingly competitive and global world.

You can view the entire discussion on a series of youtube videos, here are the links.

Opening Comments and Introductions of Julie Abrams and Alison Covarrubias

Introductions of Baat Enosh and Ayesha Mathews-Wadhwa

Women Will Rule the World?

Funding Your Business

What About Women of Color?

Can Women Do It All?

Final Words of Wisdom

Please comment and share your views!

Last week I had the pleasure and satisfaction of watching six women entrepreneurs present their business stories to their peers and loved ones at the Slate Gallery in Oakland’s Temescal District. Each woman had just completed a 12 week course in entrepreneurship developed by the Hatch Network, a new, San Francisco-based company whose mission is “to be the absolute best provider of entrepreneurial education and services for women in the world.”   

What the Hatch Network does, besides provide the curriculum, is to establish a network that connects experienced business veterans – the mentors – with ambitious business owners – the students.  Once those connections are established, the teaching/mentoring begins.

When Hatch Network co-owners, Allie Covarrubias and Claire Fontana asked that I become a mentor in their network, I didn’t hesitate. I was already familiar with their skills as leaders and visionaries and I wanted to become a part of their new venture.  Mentoring women entrepreneurs seemed like such a great complement to my financial planning practice, where I focus on women, their families and businesses.My initial concerns about time committments (I’m a solo practitioner, self employed) proved to be premature. This was a rich and rewarding experience.

So, back to the graduation celebration at the Slate Gallery in Oakland. The 12 weeks of classes are structured so that at the end, students are prepared for and required to present their business story as if they were presenting to investors or clients. They outline the who, what, when, why and how much of their business. The challenge is meant to help them achieve clarity over important business questions. Who are we? What do we provide. Who are our clients? Why are we unique? What benefits accrue to our customers? How much does our service cost? How much will we sell? And most important, how much will we make? 

As you might expect, each of the six women were as nervous as a long-tailed cat in a roomful of rocking chairs. Public speaking was a daunting prospect, added to the writing and technical skills needed to pull together a dynamic  8-10 minute presentation. But when they each took their turn, it was as if they had been practicing for days….each more polished and professional than the next. It was truly gratifying to watch them and to have been a part of their story.

Who are these ambitious women and what are their businesses? 

Pascale Teysseire
Owner,  Funding for College 
Provides a personalized college funding search to assist students/parents in attaining financial aid: scholarships, fellowships, and grants –  necessary to attend the college of their choice.

Jane Inch    
Owner, Jane Inch Life Coaching:  Reveal Your Inner Sparkle (website coming soon!)
Provides lifestyle and business design programs for the midlife/empty nester who is seeking clarity and is ready to launch “what’s next” in her life. 

Linzi Oliver
Owner, Doggy & Me Fitness
Provides an outdoor fitness class for you and your dog. 

Feleciai Favroth 
Owner,  The Art of Bathing
Provides handcrafted creams and soaps with the finest natural ingredients including shea butter
olive, jojoba, coconut and essential oils.  

Elizabeth Husserl 
Owner, Inner Economics
Facilitates  processes of awareness and change around people’s relationship to money.

Anne Cavazos 
Owner, Cavazos Environmental Consulting
Provides high quality and cost effective environmental consulting services.

Congratulations, ladies!

If you’re interested in becoming a Hatch Network student, my next class starts in January and will be held in Oakland, California. Here’s an abbreviated course syllabus:

Week 1:  Evaluating your Entrepreneurial Opportunity
Week 2:  Identifying Your Ideal Customer
Week 3:  Scoping Out The Competition
Week 4:  What Are You Selling
Week 5:  Building your Brand
Week 6:  Your Company Message
Week 7:  What To Charge
Week 8:  Marketing Focus
Week 9:  Sales 101
Week 10: Finding  the Money
Week 11: Book Keeping, Briefly Legal, Insurance 101
Week 12: Be the Boss Lady:  Team Building, Leadership
Week 13:  Your Business Story

If you would like more information, go to The Hatch Network’s website or email Cathy Curtis
at cathy at curtisfinancialplanning.com

Hatch away!

When did dining-out, facials, manicures, pedicures, personal trainers, pricey haircuts, books, magazines, CD’s, I-Phones and expensive annual vacations become necessities? How did we get here?

This fee-only financial planner contemplates this question as client after client comes in with cash flow issues — agonizing over credit card statements, wondering how they can keep up with an avalanche of bills.

As a first step in my financial planning process, I ask clients to complete a detailed cash flow worksheet. This is followed by a meeting to review this document line by line.

This exercise is as exhilarating as it is agonizing  – clients are relieved to finally be doing something around financial planning, but terrified that the end result will be deprivation.  Everyone has his or her own “can’t give this up” list.

I’ve learned to remain neutral as a client explains to me why they can’t possibly cut out their $400 a month Amazon habit or can’t postpone the $4,000 vacation for a couple of years. Really? Are you sure?

Lately, there are more and more cash flow challenged clients at my door, and of course, it’s the economy.  No longer is cash-out refinancing an option as house values plummet and equity lines of credit disappear or decrease. And, to make matters more difficult, credit card companies are lowering limits and raising interest rates. Brokerage balances are also down.

Some state employees are seeing pay cuts as high as 8 %. The self-employed and free-lancers lament incomes that have been slashed in half over the last year.

A spouse loses a job, two incomes are now one because of divorce, or unemployment — benefits have run out and there’s no job in sight. Not exactly a pretty picture.

All of a sudden, people have to live within their means, and for many, this is the first time they’ve had to watch what they spend and they’re not finding it easy to cut back.

As a financial planner I can assure you – our incomes are finite, there’s just no way around that fact. I remind clients that recessions and hard economic times don’t last forever. The good times will roll again, but in the meantime, this is a good opportunity to really tap into what makes us most happy and to learn to live within our means and make it stick.

Living within your means doesn’t mean that you have to cut out all pleasure. Think of living within your means as good practice for your retirement years when you live off the money you save now. Think of it as living a sustainable lifestyle.

Here’s a few spending tips for the person who doesn’t want to feel deprived:

1. Suspend spending on those items you can do yourself:  manicures, pedicures,  highlights, gym workouts. Or, cut back on frequency.

2. Don’t buy things you can borrow or trade  (books, magazines, cd’s).

3.  Avoid temptation – stay away from your favorite shops and toss out the catalogues unopened.

4.  Stop subscriptions to things you aren’t reading: newspapers, magazines, online and offline.

4.  Eat really well at home.

5.  Bring delicious food to work for lunch.

7.  Buy entertainment a la carte instead of via subscription: movies, theatre, and music events.

8.  Hold onto things longer – your cell phone, computer, car, and oven.

9.  Ramp down the luxury a bit – buy less expensive wines, eat at moderately priced restaurants.

10. Postpone the big vacation for a few years; enjoy smaller trips to great places.

I’d love to hear from you. What are your favorite money saving tips?

It Is Better To Give Than To Receive

TAX PLANNING 101

There are many confusing tax laws, but the one that seems to generate the most misunderstanding is the gift tax law.   Everyone seems to be aware that people can give up to $13,000 (this amount is periodically adjusted for inflation) a year with no tax consequences – but beyond that it’s fuzzy. A client asked me today if she would have to pay tax on a $100,000 gift her parents were planning to give her to buy a house.  The answer is no.

Here’s the low-down on the gift tax law:

1. Anyone can make gifts of up to $13,000 to as many people as they choose each calendar year without any tax implications. This gift is called an “annual exclusion gift” – meaning the gift is excluded from taxes. The donor can start all over again giving gifts up to 13,000 a person each and every year.

2. If a donor exceeds the annual exclusion (of $13,000) to any one person, tax is still not due until they have made gifts totaling an aggregate of more than $1 million during their lifetime.  A minor annoyance:  Form 709 – United States Gift Tax Return – must be filled out and filed with that year’s tax return.   But NO tax is due.

3. The recipient of said gifts whether it be $13,000, $100,000 or $500,000 does not pay tax on the money ever, at all.

Let’s step back and define what a gift is for IRS purposes:  It’s something that is given and nothing is received in return. It is complete as a gift. Loans are not gifts.

What  are some of the reasons people give gifts?:

1. They are generous and kind.
2. They want to help a loved one with expenses such as a down payment on a house,
   education costs, or a vacation.
3. They are very wealthy and want to reduce the size of their estate and therefore, estate taxes.
4. They know they won’t spend all their money during their lifetime and want to
   share it with their loved ones before they die.

Examples:
1. You decide to give $13,000 each to your four grown children for Christmas.  No tax is due and no gift return is filed.

2. A couple gives $100,000 to their daughter to assist in her purchase of her first home. A gift tax return for $74,000 ($100,000 -  $13,000×2) would be filed with that year’s tax return.  In subsequent years, any gifts given over the exclusion amount will be added to the $74,000. If in any given year the total lifetime gifts reaches over $1,000,000, tax will be due.