Even financial professionals can be lured into overspending
Whether it’s fancy running shoes, expensive travel or a heavy-metal music collection, America’s top money and credit gurus have costly cravings, and feel the temptation to overspend on what gets them excited. What sets them apart is how they’ve learned to temper those expensive urges.
We asked six money experts how they manage the conflict between their passions and their budgets.
Jeff Rose. Founder of GoodFinancialCents.com, member of CNBC’s Financial Adviser Digital Council.
Weakness. “My biggest vice is shoes,” admits Jeff Rose. “Wait, can a man say that? I love shoes and my wife is constantly on me saying, \u2018Do you really need another pair?'” As an avid runner, Rose owns more than seven sets of his favorite sneakers, Nike Frees, which retail at about $100 a pair. If money were no object, he’d pepper his closet with Pradas, dropping a cool grand or more on every pair of the fancy footwear.
Strength. To stay dapper from the ankle down without breaking his bank account, Rose employs two techniques. First, he gives himself the 72-hour test. “I can be impulsive, so I force myself to wait. If I really want them after three days, I may get them. Often I forget, which means they weren’t that important.” Second, Rose is ever on the deal hunt. “I love buying shoes at stores such as Marshall’s or Nordstrom Rack where I typically save up to 50 percent off the original price. Otherwise, I hold off until big sales like Cyber Monday before I satisfy my craving.”
Lynnette Khalfani-Cox. CEO, TheMoneyCoach.net, author of “Zero Debt: The Ultimate Guide to Financial Freedom.”
Weakness. The call of exotic, luxurious destinations beckons Lynnette Khalfani-Cox. “I love to explore the world; learning different languages and cultures,” she says. “My husband and I work hard, so we play hard. Travel is rejuvenative.” And it’s something they do often. Their child had taken 42 trips with them before turning 5, and Khalfani-Cox and her husband have been on every cruise ship line in the Caribbean. These trips have come at a steep price, averaging $5,000 per vacation. “If I had my druthers, we’d do it once a quarter,” says Khalfani-Cox.
Strength. So how does such an intrepid traveler remain within her means? Downsizing and discounts. “Now we take shorter vacations; a weekend or one night is just fine, and we combine business with pleasure to get the tax write-off,” says Khalfani-Cox. Recently, she’s finding well-priced adventures close to home. “Every state in the country has amazing places. We were just at a gorgeous New Jersey hotel for my husband’s birthday, with an incredible balcony. With Priceline we got it for $160 and when I told them why we were there, they upgraded us.”
Manisha Thakor. Director of Wealth Strategies for Women at Buckingham & The BAM Alliance, author of “On My Own Two Feet: A Modern Girl’s Guide to Personal Finance.”
Weakness: Sometimes it’s the little things that make life exponentially better. For Manisha Thakor, it’s her daily habit of premium coffee. “Actually, to be specific, my preferred drink is a 5.5-ounce cappuccino.” This self-professed java junkie spends $300 a month on her specialty beverages, and having recently relocated to Portland, Oregon, with its plethora of first-rate artisanal coffeehouses, she predicts that figure will only increase.
Strength: While Thakor concedes that it would make greater economic sense to brew her own beans at home, “This is one deep life pleasure I refuse to cut back on!” Purchasing coffees and enjoying them out is a joyful experience, so she combines it with work. “I am at my most creative when writing and working from coffee houses.” Still, such an expensive coffee habit can imbalance a fine-tuned budget, so Thakor is mindful about where she spends the rest of her money, deliberately making room for the extravagance.
Jane King, Bloomberg business reporter and veteran broadcaster, founder of LilaMax Media.
Weakness. Like many New Yorkers, Jane King craves living space, which comes at a dear price in her Tribeca neighborhood. “If I could spend money on anything, it would be to buy a big apartment with an awesome view,” says King. “I want an office, an outdoor area and a place to entertain.” Her desire for a larger abode really kicked in during the winter holidays. “I went to Christmas parties and got a view of how some people live,” says King, of the spacious homes that are in the $2 million $7 million range.
Strength. King’s frugality, gleaned from her Midwestern parents, keeps her from relocating to unaffordable digs, however dreamy. “It’s really easy to focus on what everyone else has, so I try to remember that I’m fortunate,” says King. “I step away and think logically think about it. Like, for the huge homes, the husband is not ever around because he has to work all the time to pay for it all. Do I want that? No.”
Victor Ricciardi. Finance professor at Goucher College, co-editor of “Investor Behavior: The Psychology of Financial Planning and Investing.”
Weakness: Some bang their heads when their credit card bills come due, but Victor Ricciardi‘s head-banging can result in those bills. If he gives into temptation, that is. This professor’s passion: “A deep enjoyment for hard rock and heavy metal music.” It began during his teenage years in the 1980s. To date, he has a collection of more than 500 CDs and listens to several each day. Ricciardi says he’d be out thousands of dollars annually if he fully let loose in the online music store.
Strength: Aerosmith’s Steven Tyler once declared, “We believed that anything that was worth doing was worth overdoing,” but Ricciardi knows normal people can’t party with their money like rock stars. He maintains a lengthy, but virtual, list of wants. “In order to control my habit of overspending on music, I utilize my Amazon.com Wish List.” Adding items to the cart (he now has more than 200 in the queue), then letting them sit while he decides which are the most important, helps Ricciardi prioritize his spending, effectively ending impulsive buying.
Sonya Smith Valentine, president of Financially Fierce, and author of “How to Have a Love Affair with Your Credit Report.”
Weakness: Starting with the 1950 version of “Cinderella” to 2015’s “Inside Out,” Sonya Smith Valentine would love to have them all. “If I could buy every animated movie that ever existed, I would without blinking an eye — and I’d be broke,” says Valentine. Her film buff habit has resulted in a collection of more than 200 animated movies. She’s spent about $3,000, but there’s always more to purchase, and each movie runs $9 to $15.
Strength. To keep from overdoing it, Valentine sets limits on the additions to her movie collection. “I only let myself purchase two new movies per year.” she says. “And then I ask for gift cards for my birthday, Christmas, etc.” These self-imposed parameters ensure that Valentine’s budget is a shining example of beauty, not beast. As much as she adores these films, going into debt for them is not an option.
The takeaway from each of these personal finance authorities who know better than to succumb to every powerful whim: You don’t have to ignore your passions if you can find a way to incorporate them into your spending plan.