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December 2011

Interview Money

Interview with Naomi

Today’s interview is with Naomi, who was kind enough to share her own journey getting into a lot of debt – partially through buying luxury goods – and then finding her way out. She had some wonderful insights and I cannot thank her enough for taking the time to do this interview. Enjoy meeting Naomi!

First things first – who are you? What do you do, and where do you live?

My name is Naomi and I am a professor at a university in Texas.

I would love to hear more about how you began buying luxury goods. When did you start, and what set it off?

I’m not really sure exactly what set it off. I grew up lower middle class and so buying Guess jeans at the factory outlet was a huge splurge (This was the 1990s when Guess jeans were popular!). I always liked to be fashionably “different” and would spend hours trolling around the mall. I remember hearing about brands like Gucci and lusting over a $300 pair of shoes. I never did buy them though. Fast forward to my early 20s and I remember a coworker returning from Hong Kong with this really colorful purse. She said it was a Louis Vuitton. I had no idea what that was, but I just really liked the look of it. I later found out that it was a Multicolore Speedy, and it was probably a knockoff. Fast forward about 8 years and one day I just got that MC Speedy stuck in my head. I got bored and started trolling the internet looking for one. I was an obsessed woman. I did eventually get that MC Speedy, but it took awhile to work up the courage to spend that much money!

Naomi’s former Balenciaga collection 

At the height of your luxury collection – how much did you have? What was your brand of choice?

I started off with the Louis Vuitton and built up a pretty good collection of 15-20 pieces ranging from pochettes (including limited editions) to limited edition Speedy bags. I eventually got bored of that and migrated over to Balenciaga. It was like a drug! All those pretty colors. I am one of those people who has to have the complete collection, whether it be the McDonald’s toys released with each movie or $1000+ purses. I wanted every color! I believe I ended up with about 15 Balenciagas at the height of my frenzied buying/collecting. I tried one Chanel, but I was too afraid to ever use it!

Do you think that shopping can be addicting? Can you elaborate, and in what ways?

I absolutely think that it can be addicting. In my case, I have compulsions to finish collections and I would spend whatever it took to have the whole collection! Research also shows that shopping releases chemicals in the brain that are associated with happiness. Once you realize that an activity produces that happiness you will strive to do that activity again and again. Sometimes I think it’s just boredom….I need to be constantly in motion and doing things (you won’t find me on a beach vegging out!). So I would spend when I was bored.

What was the ultimate wake up call for you, and what did you do?

The realization that I could afford these bags and all the “stuff” but I would never be able to pay cash because my monthly credit card payments were more than a designer handbag every month. At one point I had enough bags to cover a king size bed and I still wanted more. There is just something inherently wrong with that! At what point would I ever be satisfied? I was $67,000 in credit card debt, it was out of control. I set out a plan of attack to pay it all off. I sold everything in my house that wasn’t nailed down and hunkered down to pay it down. It took two years to pay it all off (a cross-country move slowed things down), but the handbags put about a $22,000 dent in the debt.

Do you ever think that in your “purge”, you went too far? Did you regret anything that you sold off?

Absolutely not. I needed to do whatever possible to pay down that debt. I had no business owning designer anything. I do regret selling the only bag that my husband ever bought me for my 30th birthday: A black Balenciaga City. He ordered it from New York and everything.

What would you do differently, if you could do it all over again (both when you got into shopping, and when you did the purge?)

I would save for my purchases (which is what I do now). I would absolutely buy designer bags again, but only with the ability to pay it off that same month (i.e., cash in the bank). As a person with some addiction issues, my current obsession is travel. We go on quite a lot of trips every year and every single one is paid for in cash. I also have a monthly clothing budget to help keep things in check. I recently had a lusting for a Balenciaga, but I just couldn’t forfeit a vacation for a bag!

Nicole Richie with her Balenciaga bags

What are some disturbing trends you have noticed with luxury goods and the consumption of them? Is it people who are younger getting sucked in, people who can less and less afford it?

I notice that the annual income of luxury consumers seems to have decreased. Designer goods used to be something that only the really rich could afford, but now I see people of all walks of life wearing Louis Vuitton (as an example). I always have to wonder whether it’s just something bought on credit or if they really can afford it. You can never tell nowadays! With the rampant availability of credit cards, it is so easy to “Buy now and pay later.” Speaking from experience, this is not the lifestyle anyone should strive for.

I am part of a little group online which talks about money issues, and one interesting thing we’ve discussed is how much our society is influenced by celebrity culture. Celebrities are much more visible than they ever were. We see celebrities carrying Louis Vuitton and think “Oh, we can be just like them.” It used to be that we would aspire to be like our neighbors, which is OK because they probably own a home of the same value and have a similar annual income. There are very few of us who will ever have the income of Jessica Simpson, but yet we all wear the bags, accessories, and shoes of a person worth hundreds of millions of dollars. There just seems to be something wrong with that.

What are some pieces of advice that you can share to help us gain some perspective? On balance, budgeting, saving for the future?

Well, some of this depends on where you are at. If you have ANY debt, then I highly recommend sitting down and figuring out how much debt you have. Take a look at that number and figure out how to get it to zero. There are two things you can do: Make more money or spend less.

Otherwise, with zero debt, I think it’s all about balance. Set goals for yourself, whether it be short-term goals like an upcoming vacation or a new bag, or long-term goals like a down payment for a home. I have approximately 10 savings accounts at ING that are earmarked for different vacations, general savings, house down payment, etc. Figure out a plan that works for you. There is no magic number, but I think we all need to balance the desire for the newest bag with things like retirement.

Currently, I have a lot of student loan debt and I am balancing that with my current travel bug. I still allow myself to travel, but I pay more than the minimum payments on my student loans. I have a plan to pay off the loans within 6 years as opposed to 25 years.

What are some of your other hobbies and passions?

I am a homebody, but I LOVE to travel! Remember, I like collections and so right now my goal is to visit all the countries in the world. I have a long way to go, but in the last 2 years I’ve visited around 16 countries and have 2 more coming up in the next few months.

I am also a runner and am currently training for a marathon. Again, another obsession 🙂 I started out just running 1 minute at a time, then a 5K, then a 10K, then a half marathon. It seems silly to quit there, so I’ll finish off the collection and run a marathon in February.

And finally – please share something surprising about yourself 🙂

I once got stuck at the bottom of a mosh pit at a Marilyn Manson concert 🙂 Ahhhhh, the joys of youth! Now you’ll find me at Lady Gaga and Katy Perry shows.I really hope you enjoyed the interview! I definitely related to Naomi during this post, especially on the travel bit because I love it. Thank you again Naomi and have a wonderful Wednesday everybody!
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