Assets v. Liability

This post is a bit ironic as the only college class I dropped was Accounting 101. However, my last post touched on how I see clothing as a “liability”, so I wanted to explain more about how I consider my day to day budget in basic accounting terms.

Assets — Technically defined as anything you own that will provide future economic benefits. Let that sink in. No matter how beautiful the item is, unless it will somehow generate revenue for you (Poshmark sales do not count) it is not considered an asset. There are three primary types of assets:

  • Liquid Assets: Anything that can be turned into cash *asap* without losing value. Checking accounts, savings accounts, money market accounts, cash
  • Large Assets: Real estate, cars, art, jewelry (potentially). Assess your large assets by writing down what the current market value for each item is. Large assets market value can increase or decrease based on circumstances
  • Investments: Bonds, stocks, CDs, mutual funds, 401ks and retirement plans. Can also include real estate.

Liabilities— Anything that you owe. Student loans, debt, credit card payments, etc.

Cash Inflow— Everything that flows into your bank account. Salary, interest on investments, inheritance (lol). Cash Inflow either becomes an asset or is spent on items that do not affect net worth

Cash Outflow— Everything that flows out of your bank account. Rent or mortgage payment, groceries, gas, clothing, flights. Cash Outflow either becomes a liability (if you don’t have enough inflow to cover the cost) or is spent on items that do not affect net worth

I was stunned when I realized that despite my $$$ job and paychecks, my net worth was never going to increase unless I turned my cash inflow into assets.

We all need cash outflow to be a part of our budget to survive (groceries, furniture, gas). However, the bulk of my cash outflow was spent on items that devalued or disappeared the minute I bought them. My feet looked great in expensive shoes but my bank account did not. I was a successful sales woman in tech (making more money than my parents did at that age) and had nothing to show for it apart from a great wardrobe, cute apartment, and exciting Instagram feed.

Time to make a change.

How to Stop Spending On Clothes

As I sat scrolling Sezane’s new arrivals in a coffee shop on Sunday, it hit me— the most GORGEOUS dress.

Killer silhouette (with chest support), low back, 100% silk, a beautiful gold/green print that could almost look neutral. As a huge fan of the brand, I knew that this was one of their few “special” pieces that they launch each collection and do not replace once it sells out.

I mean…how can I resist?! Sezane’s Graziella Dress, $245

It had already sold out in Size 2 and 4. As a Size 6, I knew I had stumbled upon a rare window that would not last much longer.

And yet.

And YET.

I spent more money than ever last year on clothing (in small defense, it was my wedding year and I had a lot of dresses to buy). This year, my goal is to not buy any clothing for 6 months. I am 1.5 months in.

I stared at the Sezane screen for 20 minutes, envisioning the places I would wear it: my friends weddings, a night out in LA, a vacation in Mexico. I would curl my hair just like the model. I would be th emodel. I bought a long dress from Sezane last year (I think the same model lol) and loved it, and I knew this one would provide the same joy.

In impact, however, I knew in my heart of materialistic hearts that clothing does not have a positive ROI. Beyond the few clothes that I reach for day in and day out, the majority of my clothing does not get worn enough to justify the cost. And even if I do wear it frequently at first, I rarely keep it for more than 3 years.

In financial terms, I was prepared to spend $245 (+tax) on an item that I know in 2023 might be damaged, not fit my body or lifestyle, or be out of style. Multiply that by 15 purchases and I’m looking at my $3-5k / year clothing budget that provides zero ROI (other than a few cute Instagrams).

A cute (positive ROI?) Instagram, my cute Sezane dress from last year, and mi cute primas in Mexico!

To change my behavior, I’m trying a new approach— when tempted to buy an item of clothing, I can either purchase it OR take the money I would have spent and put it into high risk investing on Robinhood. As this was money already (almost) lost, I want to put it into a riskier investment than my other savings. If I make money I’m betting I’ll be motivated to put more towards it (and thus buy less clothing), and if I lose money – well – I clearly decided I could live without the money and with the dress that I’d forget about in 4 months anyway.

Let me know if you’re interested in my progress with this idea!

Girl Power: Finance

Tell me how you spend your money, and I’ll tell you what you love.

I’d tack on— tell me how you save your money, and I’ll tell you where you’re going.

Women currently own 51% of the wealth in the US. And that number is only supposed to increase. More women are working, college educated, and running businesses than ever before in history. Because of this, millennial women have asset ownership faster than women of previous generations. Of all women who own $5 million+ in assets, 22% are Baby Boomers vs 32% are Millennials.

I want to have a conversation around women and money. How much do we make? How do we invest? When you’re able to save enough for a rainy day, what do you do with the rest of your funds?

Would love to hear what other women are doubting/have questions around the topic of money.

For me, it’s investing. How risky should I be with what percentage of my net savings? I am 29 years old, recently unemployed and with a healthy amount of savings but zero assets.

What does financial wellness in 2020?

Why Rent The Runway Unlimited?

After weeks of mulling over Rent the Runway, I bit the bullet. 

“It’s like this,” I explained to my friend Maddie on the bike path in Mill Valley. “I have two black tie weddings this summer, one of which will be over the top fancy.”

Part of the hesitation has been that I have been obsessive about decreasing my overall spend on clothes. In 2017, I spent an average of $370 per month on clothing. Which is about 5% of my total salary. 

With RTR, that spend would be an automatic $170 per month. The game then, is can I stop buying outside of my rentals? Or will I still be tempted and need to buy basics (shoes, jeans, etc.)?

Part of the appeal of RTR is the waste factor. The Daily Mail reports that women in the U.K. buy half of their body weight in clothes each year, and the average woman in England has 22 unworn items in her closet.

And the Brits tend to be less materialistic than us Americans. Without a doubt I have more than 22 unworn items in my closet (looking at you, men’s teal uniqlo windbreaker).

More tragic than that, the Self Storage Association reports that Americans spend $24 billion each year to store their stuff in 2.3 billion square feet of these units, an industry which has proven to be the fastest growing segment of the commercial real estate industry over the past four decades. The Wall Street Journal calls the industry “recession resistant.”

!!! Let me reiterate— one of the only industries across all was the storage space industry. As a society we are not only putting our dollars toward crap, we are then transporting that crap to store in units across town. And paying a monthly premium for it. 

And in my diligent case, paying to sell it online or paying for gas to drive it to a donation center. 

It was time for a change, and RTR was that change. 

Sobering Years

It was the move to a tiny apartment with a “closet” in Beacon Hill and my socialist llama-farm raised practical cousin that first started the shift. 

“You and I spend our money on very different things,” my cousin Sarah laughed as we were in Whole Foods one night. 

I had just returned a few of my ‘fancier’ ingredients (read: above $4) in the menu I was planning for the weeknight. 

“What do you mean?” I said.

“I spend on things I use everyday, like nice spices or high quality warm socks. I feel like you save your money for the glamorous. You opt for fun clothing you wear once in awhile over elevating your everyday basics.”

It was a quality I got from my mother. She would purchase discounted designer clothing, but only buy socks from Costco.

While I didn’t disagree with my mother, 8 months of living with my cousin (and a tiny apartment) began to rub off on me. When I decided to move across the country to San Francisco one year later, I shed more than 50% of the clothing I had spent my first two years of salary on. Everything had to fit into my 2013 Impreza Subaru. I was too cheap to afford a moving truck and my goods weren’t valuable enough to justify a shipping cost. 

Do You Think My Outfit Looks Cute?

The cost of a cute outfit. 

My love of the outfit first arrived when I was 23. I not only had a salary but also had a place in the professional 9-5 working world. I was beyond excited to meal prep, “be organized”, pay an exorbitant rate for the Bar Method, and most excitingly, have a reason to have consistently cute outfits. 

Between growing up in Southern California with a high school uniform & attending college in Boston, I never had the lifestyle (or funds) to focus on my wardrobe. My outfits were a mix of athletic gear before practice, “going out” tops borrowed from my roommates, and black Northface fleece jackets as I learned to dress for New England winters.

Enter age 23. With my proud $48k pre-tax salary, I was excited and felt justified to discover my style through clothing purchases (I didn’t know any other way). A few months in, I also started working part-time at J.Crew to avoid evening traffic and get discounts to help in the journey of style. 

The double whammy of a salary + endless 50% off J.Crew discounts created the storm of consumerism my first year out of college. I bought blouses, loafers, pixie pants, scarves, and more blouses. My apartment room had a large closet that began to feel small…

The Question that Lorelai Gilmore Made Me Ask Myself

Hello! Happy Monday morning. January has never been my favorite month, but sitting in a clean home with a candle after a run — I don’t hate it. There is something to love about fresh mornings, crisp air, and tackling something you’re afraid of.

I love how Lacy Phillips started her blog a few weeks after she quit her job. She just did it. So did Emily Schuman. So did Garance Dore. The content was probably terrible. But that’s not the point.

The point is to go for it in life. We’re only here for a bit.

So in this January fresh start, one of my BIG goals for the year is no shopping. Definitely not until I’m gainfully employed again. Probably not for 3 months, maybe 6, maybe 12. Why? Because “spending money on clothes is a colossal waste of money in your 20’s” — my fabulous Aunt Carole told me when I was 24. Clothes recess in value the minute you purchase them. My Poshmark sales can tell you that.

I want to make sure that I am deepening my life, not buying it. Being without a salary for the last two months has made me reconsider all of the ways I was spending my money. Kind of carelessly. And I am not a careless person. Yet I was buying small things, big things, shiny things and also constantly cleaning out and selling my closet. Spending money to burn it 1-2 years later.

In an episode of Gilmore Girls, Lorelai has an emotional conversation with Luke about her life choices. Her comment “I like my life…I like my stuff” stuck with me. Do I like my life? Do I actually like my stuff?

My constant shopping would indicate that I’m not satisfied with my stuff or my style. That I need to buy more to be happy. Am I competing or keeping up? Am I not confident in what I have or who I am? Am I bored out of my mind?

I do like my life. A lot. But I consume (media, shopping) more than I create. And the goal of this blog is to give me a creative outlet while at the same time keep me accountable for consumption. Specifically, clothing consumption.

My goal is to analyze my relationship with shopping/clothing, and also to discuss my style goals. All in light of the climate crisis and fast fashion. I know I’m not the only one who feels helpless about consumerism with climate change. I’m not sure a blog can change that, but it’s a start. And to change the world, you first must begin with yourself.

Introduction

Why am I starting this blog? Why not continue to journal?

Because it’s my biggest fear. That’s the truth of it.

Like many, I idealize the blog culture. The women I’ve followed for years and bought their recommendations. I’m curious about it.

And as my idol recommends, “Trust what makes you curious— and follow. That’s the thread that is going to guide your life.” — Garance Dore

I can’t explain why I’m so curious about minimalism, cleaning out closets, defining style, and blogs. Maybe it’s in my roots. Maybe all late 20 something millennial women are? Is it important?

As a young girl, I loved magazines. I consider blogs the more dynamic form of magazines.

My hope is that this blog encourages you to not make purchases, to spend with intention. I hope that it in some way helps the environment. I hope it makes you think.

And I hope it makes me think, too.