What’s a lot to pay for shoes?

What’s a lot to pay for shoes?

A reader once asked me this question when I was a personal finance columnist for Mademoiselle, the young women’s magazine where I was the money advice columnist over twenty years ago. At first, I thought it was a really stupid question. And so did the Merrill Lynch analyst I asked to respond. I can still hear her contempt as she repeated the question. But the question lodged in my head because, as time went on, it acquired gravity and existential heft.

I mean, really, what IS a lot to pay for shoes? When I was young and single and looking good was part of the calculus intended to improve one’s life, I spent a goodly proportion of my income on clothes. I am constitutionally frugal so I haunted sales like the legendary Barneys warehouse sale where people would literally line up around the block to get in. Or I’d make the long subway trek to the original Loehmann’s which was located in a cavernous airport hangar-like building in the Bronx. But spend I did because I didn’t have children, a mortgage, I thought I’d live forever and I instinctively knew one ineluctable truth–the better I dressed, the better both my career and romantic prospects.

Now, I am older. 53, to be exact. And I think about money differently. For one thing, I am no longer making as much of it as I once did. Even though I might have spent $350 dollars on a pair of Robert Clergerie shoes back in the day, I saved money and parked it in mutual funds where it grew and grew over the years. Sometimes, when I need a pick me up, I will log onto my Fidelity account and gaze at my 175% return in the Contrafund. It makes me feel good because money is freedom and security and those things are priceless.
But I will never spend more than $100 on shoes again. That’s what Money Hags is about. It’s figuring out how to approach money in a way that is freeing, not fear inducing. It means being clear about who you are and what you want. It means second guessing all your decisions when it come to money because money is not instinctual. Your “instinct” might tell you to go ahead and spend $500 on a pair of Christian Laboutin shoes you will wear three times in your life. We all know that thrilling hit of pleasure as you hand over your credit card to buy a beautiful object, but if you had invested that $500 in an index fund that tracked the S & P 500 ten years ago, you’d have $1500 today. That’s not chump change.

My examples smell elitist. I apologize for that. I worked at Vogue for twenty five years so when I think of excessive spending I think of those damned red heeled Laboutin shoes. But the math holds, whether you are rich or poor. Save what you can, invest early and ask yourself on a regular basis, what is a lot to pay for shoes?

Debtor’s Prison

There are a lot of people out there who will tell you how to get out of debt. They have tricks and systems, like only use cash, but what they don’t address is the fundamental question of why you got into debt. To answer that question, you need to go deep into your psyche and ask yourself this question, why did I buy something I couldn’t afford?

I know what you’re thinking…judgey.

It’s not meant that way. Some debt is good. Mortgages. Student loans (sometimes). That kind of debt can be justified as a long term investment in your future. Plus, interest rates are in the single digits.  But credit card debt is not like that. Credit card debt is evil. Credit card debt is a massive middle finger rammed straight up…you get the idea. Twenty five percent interest ought to be illegal. No, really, it should. Elizabeth Warren has talked about making it illegal but it’s not going to happen because we Americans love our credit and the system is rigged to make you love it.

Think about the advertising aimed at getting you to overspend. Going to Italy with your kids on a trip you can’t afford? Aw. Priceless. Says Mastercard, right before they hit you with ruinous interest rates.

Visa, it’s everywhere you want to be. No wonder you can’t escape it.

And if you don’t pay your balances down, you really can’t escape it. Consider the math:

You rack up $1,000 on your card that you can’t pay immediately. No big whup. Just pay the minimum every month but, looky here, at the end of the year you owe $1,250, assuming a 25% interest rate. Has the shit you bought appreciated by 25%? Hell no. Most likely it’s worth pennies on the dollar but your debt has gone dramatically up in value. And next year it will go up even more thanks to the miracle of compound interest. In two years, that $1,000 will be $1,600.

This makes me mad and it should make you mad too. What’s the lesson? DO NOT A BALANCE ON YOUR CREDIT CARD. Ever.