Catey Hill Talks Budget for Beauties

You've gotta have the shoes.  Catey Hill gets it.   That's because she's not just the Money Editor for the New York Daily News online, and the author of Shoo, Jimmy Choo! The Modern Girl's Guide to Spending Less & Saving More, she's also a reformed splurger turned savvy saver.  

I talked to her about the best ways to revamp your budget without feeling deprived.

Tell us about your new book, "Shoo, Jimmy Choo."

Shoo, Jimmy Choo! The Modern Girl's Guide to Spending Less & Saving More is a the savvy, chic girl's guide to personal finance (for those of you who want to manage your money better without having to give up those gorgeous shoes or buttery blonde highlights you simply can't live without).  I'll help you figure out why you spend, tweak your spending habits (without completely depriving yourself), get out of debt, create a savings and retirement plan that even lets you splurge sometimes (because, really, who can live without at least the occasional mani-pedi or brand-new dress?) and more.

What inspired you to write it?

Maybe I'd watched one too many episodes of Sex & the City, but 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 on my credit card and had no savings to speak of (other than the $20 emergency bill I stashed in the lining of my purse in case a date turned psycho and I had to hop a cab on the fly). 

Then I landed a job as the Financial Marketing Manger for Forbes, and it scared me. 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, realizing that unless i got my finances in order, I'd never get out of debt, save for retirement (hello no more boss ever!), or buy a home.

At the same time, I watched as girls just like me bought the latest Burberry trench when they could barely pay their rent or snapped up 10 Forever 21 dresses instead of paying their credit card bills.  When I started talking to other women about their finances, I 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 women like us written in a voice we relate to--not a mother-figure tsk tsking us, but a woman who fought her financial demons and won, a gal 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.

What are the three biggest budget blunders you  see young women making?

1. Many young women simply spend too much money - especially on their credit cards - on little things they don't really need.  That latte, the fashion magazine, the pack of gum--those little things really add up!  And throw on the clothes we buy on impluse that we don't wear all that often or the nights out that cost way to much money (even though we're a little, er, fuzzy on how fun the evening actually was), and you've got a pile of money that's wasted. Think of it like this: Spending a mere $50 per week on "little things" you don't really need (and that's pretty easy, a couple $15 dinners out, a few lattes and some groceries you didn't even eat, and poof! $50 is gone), will amount to $2,600 of wasted money in a year.  And that's quite a pile of cash, ladies!

2.  Many young women do not realize how much interest on their credit cards really costs them.  
Let me just say this - interest costs you BIG TIME, ladies!  Here's an example: Let's say you buy a $1,000 TV on your credit card, and never buy another thing with this card. Your card has an 18% interest rate and your monthly minimum payment is 2.5 percent of your balance (so your first month's payment is $25) or $10, whichever is greater. 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!).

What are your biggest tips for ladies trying to look fab on a shoestring? 

1.  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.  If all this online swapping isn't your thing, tap into your network of family and friends and arrange a "swap night."  Have everyone bring over the items they'd like to swap and exchange to your heart's desire.  You can also swap services like dog-walking or babysitting. 

2.  Become the coupon queen.  There is almost no reason you should pay full price when you have the Internet (and Savings.com!) right at your fingertips.

3.  Don't be afraid to haggle. These days many establishments, especially smaller, non-chain stores, will lower their prices if you ask for a discount.

4.  Harness the power of your accessories.  When you don't have the cash to buy the latest styles, use your accessories to update your look!  A trendy scarf, great pair of boots or gorgeous new bangles can make your basic clothes look very this season.

What about for ladies trying to make their budgets look fab?

The first thing you need to do is keep a spending diary for 2 weeks in which you write down every single thing you spend money on (yes, even that 75 cent Diet Coke you needed at 4 p.m. to keep you awake or that $4 Vogue you snagged to keep you occupied at the airport!). At the end of the two weeks take a good, hard look at that diary and figure out what areas you can cut spending and items you can live without completely.  Then, make concrete goals for yourself to reduce spending. Once you know what areas and items you spend too much in, make yourself a budget.  I suggest using Mint.com to help you control spending in the future.  

In honor of the time of the year, how about a few suggestions for New Year's Resolutions for women trying to get their financial life in order?

In the perfect world, you would save about 13% or more of your income each month and nail all of these resolutions.  In the real world, I realize this is often tough.  But here's a list of resolutions I hope you all keep!

• If your employer matches contributions to your 401(k), you must participate up to what they match.  

• Pay down your high-interest debt - like credit cards - as quickly as you can, and make sure you always  pay the minimum on these debts on-time.

• Start an emergency fund and build it up until it contains 3 months pay.  Put this in a relatively safe savings account that allows you easy access to the money (you don't want it tied up when you need it for an emergency) and earns interest.  A high-interest savings account or an MMA work well for the emergency fund.

• Once you have built up three months of savings, open a Roth IRA.  Max it out.  

• Finally, once you have done all of the above, max out your 401(k) and build up an emergency savings cushion of 6 months pay.

To hear more of Catey's advice on money matters, or to ask for a little advice, check out www.ShooJimmyChoo.com .  She's giving away a $500 Shopping Spree on the site.  Follow her on Twitter @CateyHill.

Got any plans to revamp your finances this New Year?  Leave 'em in the comments below!

And of course, follow me on Twitter @SavingsMBones for the best beauty deals!