Luxury goods are on to something

I was perusing one of my favorite blogs, Racked, for some sample sale happenings in NYC when I stumbled upon an interesting article. The title being:

As a self-proclaimed financier (well, not entirely because I do have a professional certification, some college degrees, and a lengthy career to substantiate this claim),  and an adorer of designer good, I have to say that this does not entirely surprise me. In fact, I don't believe that this secondary market is limited to Birkins, but could extend to other iconic brands whose handbags may be priced beyond that of the average credit card spending limited (think Chanel, Celine and *certain* LV bags).

It got me thinking about secondary markets of purses as a whole. Similar to a corporation, whose stock price to signifies people's perception of value of the company, handbags are also strategically priced to represent the value of the brand - is it hot (like Google?), the perceived quality of materials and construction (like Apple?), and cost to sell (like Everlane?).

I remember in high school I had always dreamed of buying a Chanel purse. Back between the years 2002 and 2006, I worked hard, ignored an aspirational social life, and focused on homework because I wanted an education and a career to afford me this purse. Back then, the purse was "only" approximately $2,500. When I took my trip to Paris, and walked into 31 Rue Cambon, Chanel's original store, where Gabrielle Chanel lived, I was flabbergasted by how much the price of a Chanel purse had increased! A classic Chanel purse with a chain strap was now retailing for approximately $4,750.

Simple math question, how much has the value of Chanel increased in the last 10 years? This is absolutely a rough estimate based on what I remember in high school and not backed by any valid historical pricing.

About 90% in about 10 years. This is all pending that you keep your bag in pristine condition so that someone doesn't mind purchasing it second hand as well, which probably means that you didn't get to enjoy the spoils of your riches as much as you could have.  Furthermore, you would have needed incredible foresight to predict that the designer handbag you purchased would actually still be desirable in 10 years. Not to diminish the creativity of Oscar de la Renta or Alexander McQueen, but if I had $2,000 to spend on a purse for resale value, I'd much rather try to get a Chanel versus the other two designers because there is something truly timeless about the brand's designs.

This is about how much you could actually sell your bag for had you kept it in pristine condition. Using the same math above, that's about a 40% return on your investment...not too shabby.

I guess you can tell that I found that article very interesting, but let's not get carried away here. I'm not saying you should be investing your money in purses instead of stocks, bonds, or mutual funds. Let's be real, if you were looking for a true investment, in 2005, the price of 1 share of Google was about $315 versus now at $718. In 10 years, the value of 1 share of Google increased about 130%.

Nonetheless, could designer bags be the new gold?

Queensboro Moment

 "The city seen from the Queensboro Bridge is always the city seen for the first time, in its first wild promise of all the mystery and the beauty in the world." - F. Scott Fitzgerald, The Great Gatsby

I had a thought when I walked to the Riverview Terrace at Sutton Place the other day. I was staring at the Queensboro bridge and was reminded about how Fitzgerald romanticized the rusty traverse. It got me thinking about 2014 ending and what promise the idea of a new year will bring. I wish I could say I'm typically not one to make resolutions, but in actuality, I'm typically one to make resolutions that are so grand in nature that I tend to not keep them. Because of this perfunctory scheme for creating and attaining personal goals (I just decided I wanted to expand my vocabulary in 2015), I decided to rebel against the standard method of creating a resolution. I'm going to approach personal self-improvement in 2015 as one should an annual budget. Annual budgets are created at the beginning of the year. You create a target and try to hit those targets by the end of the year. However, significant changes in the economic environment can arise. A company (or a person) could be met with a sporadic event or realize that maybe the initial budget was too unrealistic. The same applies to personal goal-setting...because what is an annual budget if not a financial goal? This year, I have a few undisclosed resolutions that I will work towards. Should life happen, I'll reevaluate on a quarterly-basis! Who would have thought the applicability of financial strategies would extend beyond money?

Sweater - Urban Outfitters; Scarf - Aritzia; Pants - Aritzia; Coat - Zara; Shoes - Zara; Bag - Mansur Gavriel Bucket Bag

Lessons in Finance: Your Net Worth

There are so many financial products available to sophisticated investors and ordinary individuals to aid in capital preservation and growth of assets. However, before anyone can tell you how to utilize your assets and maximize your rewards, a simple concept must be understood: Net Worth.

As an accountant, I like to stress this concept first because it is the foundation of accounting. What is accounting if not the language of business? It goes as follows:

It's simple. What you have minus what you owe equals what you're worth. Why is this important?

1) Starting Point - The first benefit to understanding your net worth is that it is the foundation for developing a financial strategy. Pretty simple: if you have a negative net worth, your financial plan will be based on paying off the debt currently outstanding and increasing that net worth. If you have a positive net worth, your financial plan will be based on maintaining your current financial condition and increasing that net worth.

2) Goal setting - Once you've identified your starting point, you can define your goals. Ask yourself this basic question: Where do I want to be in 5, 10, and 20 years? Setting a financial target, no matter how outrageous it might be, allows you to work towards something. You're more than likely going to benefit from having a plan than not having one...no statistics to back that rationale up here, just simple logic. Regardless, set some short term and long term goals. For instance, at the beginning of each year, I like to set a goal for how much I'd like to have in my savings account at the end of the year. Maybe you have some student loans that you'd like to trim down. If so, how much do you want to pay off by the end of the year (short-term), and when do you want to pay the entire debt off (long-term)?

3) Budget creation - Lastly, once you've set your goals, create a budget as a plan for how you're going to achieve those short-term and long term goals. Create a short-term budget and a long-term budget to coincide with those goals. There are many different types of budgeting strategies, but that's for another time!

Remember, every book on investing, financial planner, or advice blog will tell you the same thing: it's never too late to start! Here are two simple online tools to calculate and illustrate your net worth:

1) CNN Money (http://cgi.money.cnn.com/tools/networth/networth.html)

2) Investopedia (http://www.investopedia.com/net-worth/demo/)

Calc-u-later!
-Ben Wyatt, Parks and Recreation

About this blog

There is a first time for everything. In this scenario, not necessarily for me. I have probably gone through a total of 3 blogs because I couldn't quite nail a unique idea in a sea of never ending blogs and create a one that is representative of myself. Therefore, without further ado, I am now finally introducing a blog that I believe to combine both of my interests into one fun (for me) place: The Eff Words Blog. This is a blog about fashion and finance from a stylish saver (regardless of what my husband says).

The mission of this blog is to create an environment where fashion and finance can thrive together, and not become mutually exclusive as many would initially think. I must disclaim at first that the opinions expressed on this blog are my own and may not necessarily work for you; however, I'm sharing because maybe it will!

What are my qualifications you may ask? Well, I graduated from a well-ranked business school with a Bachelor's of Business Administration in Accounting and a Master's of Science in Finance. I may not be an Ivy League investment banker, but I do know a little more than your average Joe about money and ways to make a little go a long way. On the other side of the spectrum...my fashion credential is that I simply love it. It's always been a little bit of a hobby of mine. I love keeping on top of the latest trends and crafting my personal style. My favorite designers are Marc Jacobs and Isabel Marant. My favorite brands/stores are Free People, Urban Outfitters, Madewell, J. Crew, Zara, Asos, and Forever 21. I love finding good deals at Marshalls, and Nordstrom Rack.

Thanks for visiting. I hope you have a good time!

-S