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WALL STREET, CALIFORNIA | Money Make-Over: Southern
Californians Learning How to Succeed in Personal Finances

Freelancer Wants Freedom to Last

April 27, 1999|JERRY CROWE | TIMES STAFF WRITER

Lori Mayfield leads an exciting, active life.

Single and self-employed, the 36-year-old freelance advertising copy writer enjoys the personal and financial freedom to travel extensively and pursue interests such as snowboarding, photography and mountain biking.

Charging a day rate of $850, she's able to live well on an average annual salary of about $80,000. And though her monthly income can fluctuate wildly, she has earned as much as $95,000 in one year.

Her fixed living costs are a modest $795 a month, her part of the rent for a shared, two-bedroom apartment in a posh Westside neighborhood, but she does spend on some extras--about $1,700 a year for yoga, Pilates, rock-climbing and spinning classes, and she drives a $35,000 car.

A big chunk of her disposable income, she admits, goes to buying clothes (about $250 a month), as well as dining out, traveling and generally enjoying herself.

In the last three years alone, she has visited London four times and also trekked to Alaska, France, Africa and Peru. And she's planning a five-week trip to Nepal and Thailand in October.

"I'm having a lot of fun," she says, "but I'm a little stressed out about it on the financial end."

As a freelancer, Mayfield worries that business might dry up and clients stop calling, "so money is constantly on my mind."

Other than a car loan, however, she has no debts, and she pays her credit card bills in full every month to avoid interest charges, while collecting airline mileage program points based on her card purchases.

But she hasn't saved much.

If not for a recent inheritance of $30,000 and 6.6 acres of farmland in Texas, worth about $7,000, her only assets would be an IRA worth about $14,500 and a money market account worth about $2,000.

"I worry," she says, "if I'm being smart with my money."

Until recently, she hadn't given much thought to retirement planning because she thought she'd soon be married, possibly with a couple of children, living with her family in her own home.

"I'd hoped by now that there'd be some dual income" with a working husband, she says. "I still expect that will happen."

In the meantime, she says, "I'm at an age where a lot of my friends are buying houses and I'm thinking, 'Wow, that friend's doing the same type of work I'm doing. How did they make their money work for them?' "

Hoping to find some answers, she applied to The Times for a Money Make-Over and was put in touch with Eric D. Bruck, a fee-only financial planner based in Culver City.

His advice: Get serious.

Investing in Yourself Goes Only So Far

Mayfield's financial choices, he says, are based too much on the here and now. Mayfield agreed, but noted that some of her expenses pay off in ways that can't be measured in dollars and cents.

"Most of my investments have been in what's often referred to as 'the best investment you can make is in yourself,' in the form of travel," she says. "That yields some education, new perspectives, some creative material, memories--and a bunch of pretty pictures."

Bruck agrees that "investments" take many forms, and says education in any form is invaluable, but he says everyone will need cash when they stop working or the economy slows down.

"The money you earn today is the source of everything you're going to be funding in the future," he says, "so your lifestyle should not mortgage the future. It should take in tomorrow's realities and tomorrow's obligations. . . .

"It's better to try to design the way you want your life to proceed rather than live for the moment, which is what you've been doing. You haven't really planned for the future. You've planned for this year: If I have it, I'll spend it. If I don't, I'll scramble. That's been your approach."

Mayfield, he says, should prepare for the possibility that she may never marry and be prepared to take care of herself.

And she should start now.

"You say that you want your money to work a heck of a lot harder for you," he told her. "What's equally important is that you get time working for you," because savings tend to grow fastest only after a few decades have passed.

The Idea of a Steady Job Just Doesn't Cut It

One thing she might want to consider, he said, is taking a full-time position at an advertising firm, which probably would provide valuable perks such as a 401(k) retirement plan, subsidized medical benefits and disability insurance.

But she's not interested.

"Psychologically," says Mayfield, who has held staff positions in the past, "I like freelancing better. . . . I think there are two kinds of people: the kind that cling to the predictability and stability of a staff job and think that anything but that is unbearable, or those like me, who feel like that sort of thing feels like imprisonment."

If Mayfield wants that freedom, Bruck says, it's even more important that she educate herself about investing through books, magazine articles or seminars and build a financial structure of her own through a disciplined investing program.

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