How 20something Catey Hill Went From Being A Recovering Shoe Addict (70 pairs...10 with identical black heels) To A Financial Adviser and Author of "Shoo, Jimmy Choo: The Modern Girl's Guide to Spending Less and Saving More."
Learn how this New York City writer got herself out of credit card debt, built up an emergency savings fund, saved " a ton" in her retirement fund, bought an adorable apartment in Brooklyn, and became the money editor of the New York Daily News online.
When Catey Hill, author of "Shoo, Jimmy Choo!: The Modern Girl’s Guide to Spending Less and Saving More", first moved to New York city, with episodes of Sex and the City still in her head, she began a high-lifestyle spending spree that left her in credit card debt, with no savings or money in her retirement fund. Then she got a job as a financial marketing manager that was "a giant wake up call."
Now, she has written a book for women like herself "latte-in-the-morning, closet-stuffed-with-shoes, can't-resist-a-sale kind of girl," who might be intimidated and confused by their finances. In this interview, she shares her best solutions for women who are emotional spenders that use shopping as a way to cope with stress and depression and her ten best tips for getting on the path to financial security.
Commitment: Are you really a recovering shoe addict? If so, how bad was it? How and why did you recover?
Catey Hill: Ha, yes, I was! Maybe I'd watched one too many episodes of Sex & the City, so when I moved to New York City I lived it up. I got an apartment in swanky Chelsea, went out to the coolest new restaurants, bought shoes I couldn’t afford - at one point I had 70 pairs of shoes, 10 of which were nearly identical black heels!
Meanwhile, I was building up credit card debt, had no savings and certainly wasn’t putting anything into a retirement fund.
Then I landed a job as the Financial Marketing Manager for Forbes, and it was a giant wake up call. At first, we’d be in a meeting and I’d hear terms like Roth IRA, nod and pretend that of course I knew what they were talking about, and then race to my computer to look it all up so I didn’t look like an idiot.
But slowly but surely, I started learning more and more about money management, which helped me get my finances – and shoe addiction - in order.
Commitment: What led you to a career in finance and writing about money?
Catey: The Forbes job incited my interest in and knowledge about personal finance, and my career moved on from there. I began to read more and more personal finance books and talk to my friends about money issues.
The more I talked to women about their finances and realized I wasn't alone when I'd felt confused and a little intimidated by money management.
And the more I looked into it, the more I realized there wasn't a personal finance book for girls like us – young women in the 20s and 30s – written in a voice we relate to (not a older woman tsk-tsking us, but a girl our age who fought her financial demons and won, a girl who gets that its not an option to never buy an amazing pair of shoes or go cold-turkey on nights out.
So I decided to write it – and "Shoo Jimmy Choo!" was born. I also began working as the Money Editor of the New York Daily News online to immerse myself further into the world of personal finance.
And from Forbes, the book and the Daily News job, it’s all just branched out from there.
Commitment: In your book, you write, "I've got the solution to your financial woes...I can set you on the path to financial security." Okay, so what are ten things every women should do who wants to attain financial security?
Catey's Ten Tips For Financial Security
• Make financial goals and solid, step-by-step plans to make them happen
Every single woman needs to make a list of her financial goals – any goal that costs money – be it buying a home, getting out of debt, or saving for vacay (Rio, anyone?!), then figure out how much each goal will cost and make a step-by-step action plan so she can make the goals a reality.
• Put yourself on a budget
If you spend too much money, you won’t have enough to pay down your debt and start saving. So it’s time to put yourself on a budget! Try a site like Mint.com to get started. It’s free and easy to use.
• Dig yourself out of credit card debt
To do this, first, make sure you are paying the lowest possible interest rates on your cards (call the credit card company and ask them to lower your rates, or switch cards – you can find competitive card deals on Bankrate.com and LowCards.com – if necessary).
Then, list all your credit cards in order of interest rates. Pay as much as you can on the highest interest rate card and the minimums on all others. Do this until your debt is paid off.
• Deal with your other debts smartly
Just like with your credit cards, pay as much as you can on the highest interest rate debts, and the minimums on all others, until you are debt free.
• Get the 401(k) match
If your employer matches your 401(k) contributions, you must contribute up to what they match. It’s F-R-E-E (that’s one four-letter word that’s we love!) money!
• Build up an emergency fund
You need 6 months worth of income saved up so that you’ll be financially protected just in case something happens.
• Save smartly for retirement
It’s important that you are savvy not only about how much you put into your retirement fund, but also how you allocate the money. I’d recommend reading a book on the subject to make sure you know what you’re doing with your money.
• Buy a home
Now, this isn’t a universal rule – sometimes it is better to rent! – but buying a home is often a smart investment. Go on Bankrate.com and look at their Rent vs. Buy calculator to see if this makes sense for you.
• Get the right insurance
Everyone needs health, auto (if you have a car), homeowner’s or renter’s and disability insurance. If you have kids, you should probably also get life insurance.
• Get smart about your taxes
Knowing the credits, deductions and exemptions you can take can save you thousands of dollars, so time to get reading (the tax planning section on About.com is a great place to start).
Commitment: What if a girl simply likes to spend money, and doesn't care to worry about the consequences, what are your thoughts on that?
Catey: Eventually it will catch up with you. Sure you can live large now, spend on your credit card and just pay the minimum, save nothing for retirement, have no emergency fund, etc. but the longer you do this, the more precarious the situation will be when you finally have to face the facts.
As my mom used to say (I can’t believe I am quoting my mother, but she’s right!) “money doesn’t grow on trees.”
And she’s right, spending money you don’t have will eventually have consequences. And waiting to start saving has some bad consequences too!
Here are a couple examples to drive home that point:
• How Your $1,000 TV Ends Up Costing You More Than $2,000
Let’s say you buy a $1,000 television set on your credit card, and never buy another thing with this card.
Your card has an 18 percent interest rate and your monthly minimum payment is 2.5 percent of your balance (so your first month’s payment is $25).
This interest rate and minimum payment are pretty standard for credit cards. You pay the minimum—no more, no less—each month.
How much will this TV cost you? Drumroll, please . . . a whopping $2,115.41—more than double the TV sticker price. You’ll have paid more in interest than the actual cost of the television! And it will take you more than twelve years to pay it off (and by that time, I’m sure you will have gotten a new one!).
• How Investing Only $144,000 Can Make You a Millionaire
The earlier you start saving for retirement, the longer your money will have to grow. (Translation: Start now and get rich with a lot less effort!) Let’s say you get an 8 percent return on investment (this is pretty standard for retirement fund returns over the long term).
If you put $300 per month into your retirement account starting at age twenty-five, you’ll be a millionaire at the age of sixty-five. If you wait until you’re thirty-five to start contributing this $300 per month, you’ll have only $440,445 upon retirement—less than half the money you’d have had if you had started ten years earlier!
Commitment: What are some ways a woman can identify her spending style?
Catey: Whether you’re a jeans and t-shirts or skirts and heels kind of girl, you’ve got your own style. But it’s not just your wardrobe that gives you style; it’s also your spending choices—aka your spending style. Why should you are about it? Because once you determine your unique spending style, you can finally learn to spend less (and save more!) money – once and for all!
To figure out your spending style—what you spend money on and what triggers you to spend— you should keep a spending diary for two weeks.
In this diary, you’ll write down all the “little things” you buy (i.e. items that you buy pretty frequently, usually at least weekly or once every few weeks) as well as the emotion, motivation, and other relevant information about the purchase.
For example, if buy a gorgeous pashmina when you are feeling crappy, your emotion/ motivation might be: “Retail therapy. Felt like crap after Heather got the promotion and I didn’t.”
Once you’ve filled in your spending diary, it’s time to review it to identify your “spending triggers”: factors that cause this spending. This can be a certain emotion like stress that triggers you to spend, certain people that seem to cause you to spend, and more. Maybe after a tough day at the office you drown your sorrows at Forever 21.
Maybe when you’re with your BFF, you always seem to end up at that expensive martini bar. Once you’ve identified these triggers, write them all down, and you’ll have a map of your “spending style.”
Commitment: What if a woman uses shopping as a way to deal with stress and depression, how can she conquer that?
Catey: I think a lot of women do this – I know I did! – and it is important to take control of emotional spending. You don’t need stuff to make you feel better! The first thing to note is that awareness is key – once you acknowledge that you’re an emotional spender, you’re taking step one to making it better.
Catey's Tips For Emotional Spenders Who Use Shopping To Cope With Stress and Depression:
• Go green!
And by “green” I mean cash! If you’re feeling down, don’t take your credit card or debit card with you, just bring limited cash. (And only the cash that you really need: You do not need those Tory Burch flats or the caramel macchiato, you really don’t!)
• Do something that (gasp!) doesn’t cost money
When you’re feeling down, why do you need to spend money to lift your mood? Why not try an activity – like calling a friend, going to the park, etc. - that will take your mind off spending.
Commitment: What do you think are the five biggest mistakes women make when it comes to their finances?
Catey's Thoughts On The Five Mistakes Women Often Make When It Comes to Finances
• Not having financial goals and a solid plan to make them happen
Every single woman needs to make a list of her financial goals – any goal that costs money, then figure out how much each goal will cost and make a step-by-step action plan so she can make the goals a reality.
• Spending too much money
Spending is the crux of your financial life. If you spend too much, you won’t have enough to pay down your debt quickly or to save for retirement, your emergency fund or other goals.
• Not having the right insurance
Everyone needs health, auto (if you have a car), homeowner’s or renter’s and disability insurance. If you have kids, you should probably also get life insurance. If you don’t have the insurance you need, it can literally bankrupt you. Not a pretty financial proposition any way you slice it!
• Not dealing with credit card debt wisely
See Question 2 above – that $1000 TV would cost you $2000+ if you just paid the minimum on your card. The more you pay each month, the less it ends up costing you. And the less you pay to the fat cats at your credit card company, the more you’ll have in your little hands!
• Not saving enough
Women need to save about 13% of their income each month for retirement, and they also need an emergency fund of about 6 months worth of income built up.
Commitment: What do you think are the smartest moves you've personally made when it comes to your finances?
Catey: The best thing I did for my finances was making a list of financial goals and a step-by-step plan for making them happen. That financial goals framework, which I update every six months, keeps my entire financial life on track. It helps me keep my eye on the ball – the cushy retirement I covet, the safety net I need, that amazing Brazilian vacation I’m dying to take.
And you know what? Thanks to that financial goals chart, I have gotten out of credit card debt, built up an emergency fund, saved a ton in my retirement fund and am in the process of buying an adorable apartment in Brooklyn! Yay!
Commitment: Can a woman buy a house if she has no down payment? What is your advice for someone who wants to own their own property, but is having a hard time saving?
Catey: In these times, it is highly unlikely that a woman will be able to buy a house with no down payment. So, ladies, it is time to start saving for that down payment!
My advice: Visit Bankrate.com and use their Savings Goal Calculator to figure out how much you will need to save each month to reach your goal of a down payment (a down payment is usually about 10 – 20% of the purchase price).
Then you’ll need to put yourself on a budget so you’ll have that amount of money to save each month for your down payment. Mint.com is an incredible, free budgeting site!
Commitment: What are some ways to splurge that won't break the budget?
Catey: I still splurge (I mean, I will never stop loving a great pair of shoes!), it’s just that now I budget for these splurges. Some of my favorite recent splurges: a Marc Jacobs red silk dress and a pair of black Coach ballet flats.
But I’ve also learned that there are other great ways to get the clothes – and other stuff - I’m dying to splurge on, without actually having to splurge for it.
One of my new favorite tips: Swapping - it's the new shopping!
I love the swap - whether it's online or a swap party. You can literally get what you want without paying a dime for it!
Sites like BarterQuest.com, SwapTree.com, U-exchange.com and TitleTrader.com let you swap almost anything online.
PaperBackSwap.com or BookMooch.com are great for trading books, DignSwap.com and RehashClothes.com for trading clothes.
Craigslist.com can also be a goldmine – just check out their barter section. You can also host your own swap party!
To Purchase "Shoo, Jimmy Choo!: The Modern Girl's Guide to Spending Less and Saving More" click here.
