Picking the perfect diamond – how to buy a wedding ring

 

While diamonds may be a girl’s best friend, shopping for them is many a man’s worst nightmare.  Combine bewildering choices, fickle female tastes (no offense ladies), high prices, and high pressure salespeople, and you have a recipe for a pre-marriage meltdown.  Thanks in large part to De Beers’ marketing campaigns, about 4 in 5 American women go with a diamond ring for their engagement hardware.

(Haters: if the idea of an expensive piece of jewelry as a prerequisite to declaring your everlasting love makes you feel slightly nauseous, you’re in the minority in America, but definitely not alone.  About 20% of women don’t get diamond engagement rings.  Here’s an article by a woman who makes a gender equity argument against expensive engagement rings.)

Buying an engagement ring is a big financial decision.  I’ve put together this guide to help you and your future spouse  get a high-quality ring without going broke in the process.  You might wonder what the heck a financial advisor knows about diamond rings, so let me give you my credentials: I spent some time in the appraisal and retail jewelry business in my youth, and have also been through the ring selection process prior to popping the question to my then-girlfriend and now-wife.

How to buy a diamond

Shape of main stone

 

 

The first thing to decide is what shape of diamond you’re looking for.  Traditional shapes include the ’round’ and square ‘princess’ cuts.  The more adventurous might consider a cushion, radiant or emerald cut.  (If you opt for the emerald, get a stone with high clarity; flaws show up much easier in this cut of diamond.)  While this is a personal decision (hint: if you’re a man, it’s not yours), you can’t go wrong with classic cuts like the round and princess, which should always be in vogue to some extent.

Also consider whether the future ring-wearer wants a ‘solitaire’ (one stone all by itself) or something with either small or medium-sized diamonds (or other gems like sapphires) surrounding the larger main stone.  The easiest way to determine what kind of ring you want is to go out with your betrothed and try on several of them.

The Four C’s

Everyone who has considered buying a diamond has probably heard of the four C’s.  While each may vary in its importance to you, I’ve given some ‘minimum’ guidelines for each ‘C’ to help you buy a high-quality diamond.

1) Carat often gets too much of the focus among novice diamond purchasers.   The carat determines the size (technically, the weight) of the stone itself.  Size is only part of what makes a diamond look nice.  Too big a stone, especially on a slender finger, can look gaudy (to me anyways.)  I recommend a smaller stone if it allows you to buy a higher-quality diamond in terms of the other C’s below.  A brilliantly cut, clear 3/4 carat stone will look nicer than a dull, flawed 1 carat.  To me, buying anything with a main stone weighing over 1 carat is overkill (but I’m sure more conspicuous consumers would disagree.)

Also, buy a stone that’s slightly under than the standard carat weight.  For example, if you’re looking for a 3/4 carat stone, buy one that’s 0.73 or 0.72.  Want a whole carat?  Go for 0.95.  This can save you a couple to several hundred dollars on an otherwise identical stone.  (When they ask you how big it is, go ahead and round up, no one can tell any differently.)

2) Cut helps light shine out through the diamond’s many surfaces and determines the stone’s brilliance.  This is one of the most important characteristics in a diamond, so don’t scrimp here.  You want that rock to sparkle!

‘Ideal’ (equivalently  ‘Excellent’) is the highest grade, reflecting nearly all the light that enters the stone.  ‘Very Good’ is a close second to ‘Ideal’, but at a lower price.  ‘Good’ reflects most of the light, and is much less expensive than ‘Very Good’.  For a high-quality minimum, stay at ‘Very Good’ or above (avoid the ‘Fair’ and ‘Poor’ categories.)

3) Clarity tells you how few and small the imperfections are within the stone.  These flaws fall into two categories: inclusions (inside the stone) and blemishes (on the surface of the stone.) Inclusions take various forms including ‘feathering’ (small dull lines in the stone) and minute black specs of carbon.  The clarity scale ranges from Flawless (no imperfections visible with 10 times magnification) to Included (imperfections visible to the naked eye.)  Grades are determined using a 10x magnification jeweler’s lens called a ‘loupe‘.

Source: Wikipedia

Very Slightly Included (VS1 or VS2) stones will generally not have any flaws visible to the naked eye, and it will be difficult to moderately easy to find any flaws at 10x magnification.  VS1  or VVS2 is a good reference point for a very high quality stone.  Going any higher than VVS2 won’t likely make any difference in how you (or your jealous friends) judge the ring.

You could go down to SI1 if you’re looking for something less expensive (but no lower, and look the stone over carefully with both your naked eye and a jeweler’s loupe before buying.)

4) Color determines just how ‘white’ the diamond is.  Lower-grade diamonds with yellowish-brown color traces were ingeniously marketed as ‘Champagne diamonds’ (not to be confused with ‘fancy colored’ diamonds like ‘Canary Yellow’ ones.)  While I’m personally not a fan of these off-color stones (except perhaps faint yellow ones for jewelry other than wedding rings), those who like their tint can find some good bargains. The highest color grade is D, and grades D – F are deemed ‘colorless.’  Grades G – J are ‘near-colorless’, and really look colorless for all practical purposes.

Stay at ‘J’ or above (anything less will have faint yellow traces to it.  You can often see this by looking at the stone while placing it flat against a white piece of paper.)   Use ‘I’ as your high-quality guideline.  Color has a pretty big impact on price, and anything above ‘I’ won’t make much (if any) difference in how you perceive the diamond.  For that reason, I recommend sticking with ‘I’.  You can go with ‘J’ if you’re on a tighter budget.  The difference between J and I can be about 10-15% in price, with a similar difference between I and H.

More information on the 4 C’s

BlueNile.com has a good guide to diamonds located here if you want more info (I used it in fleshing out the above descriptions.)

How much should you expect to spend on an engagement ring?

After you get an idea of what style of ring you want, think about what price range you’re trying to stay within.  Don’t pay any attention to the ‘two month’s salary’ industry-driven nonsense.  You can get a very nice 3/4 carat solitaire ring for about $3,000 at BlueNile.com, my preferred choice for diamond purchasing.

Think about what’s most important to you and your fiance(e): a larger downpayment for a house, extra money to spend on a wedding or honeymoon, or a bigger/nicer diamond ring.  Weigh these things when deciding how much to spend.  In general, don’t buy a ring that you’d have to finance.  If you can’t save up enough to buy the ring in cash, it’s probably too expensive for you (or you need to go back to financial basics.)

Diamond prices rise exponentially with size, meaning that you pay a big premium for a big rock.  See the graph below to get an idea of the price changes for stones of varying sizes (keeping quality constant):

Steps to making your purchase

1) First, go online and look at diamond shapes and settings to get an idea of what you want.

2) Then, go to jewelry shops to try on these types of rings until you know EXACTLY what you want (take notes and ask questions; anyone that really wants to sell you something will be very helpful.)  Figure out your ring finger size as well (your non-dominant hand fingers will be slightly smaller than those on your dominant hand.)

IMPORTANT: when you go shopping, tell yourself your are NOT going to buy yet.  (Leave your checkbook and credit cards at home if you don’t trust yourself.)

3)  Next, go to BlueNile.com and find the ring you want for a better price than you’ll get at any physical store.  You can easily search tens of thousands of diamonds by very exacting criteria.  They have a 30-day return policy in case you don’t like the ring once you actually try it on (but try to be very sure before you buy anyway.)  My wife and I bought her engagement ring through them and are very happy with it.  Amazon.com also sells diamonds online.

Why you should not buy a diamond at Tiffany

Jewelry carries a HUGE markup at physical stores, the most egregious of which is at Tiffany.  Yes, Tiffany has high-quality diamonds (and fantastic salespeople and marketing), but if you use high standards like the ones I’ve suggested above, you can get a diamond every bit as good (or even better) for a much lower price at online stores, or at Costco.  While Tiffany does everything it can to convince you that their round, VVS1, H color, Ideal cut diamonds are infinitely superior to Blue Nile’s round, VVS1, H color, Ideal cut diamonds, they are spouting nonsense.  (For the socially conscious, all reputable diamond sellers, including Blue Nile, guarantee that they sell only ‘conflict-free’ diamonds.)

The fact is that when held to equivalent, independent standards, diamonds are a commodity product which can be sold at a low markup by efficient operators like Blue Nile or Amazon.  Take advantage of this and get way more diamond for your money by buying online.

Settings (rings)

One exception to why you might buy something from a non-online store would be if you wanted a particular setting that was unavailable elsewhere.  I would recommend finding out if that ring-maker will set a loose stone (purchased online) and set the stone & sell you the setting separately.  If not, you may want to look elsewhere.  Settings typically come in gold (white or yellow; white being more popular for women today) and platinum (looks like white gold, but is stronger.)

For gold, the Karat determines how much gold is in the metal, and impacts the brilliance of the color.  For women, 14K or 18K (out of a total of 24K, which is essentially 100% pure gold) is typical.  18K is roughly 75% gold (18/24) and 14 is about 60%.  White gold is coated with rhodium to make it look truly white.  You may have to get it re-coated at a jewelry store for around $20 – $30 every couple of years if and when the rhodium starts to wear off (the ring will look duller and slightly yellow when this happens.)

10K is the lowest concentration used in the US for jewelry and is typically reserved for men’s rings as it is sturdier than higher karats of gold.

When you buy wedding bands, I recommend using the same online stores as above.  However, because you’re not buying a large diamond, you might consider some physical stores, like Ben Bridge, for your band if you don’t like the available options online.  Prices will be closer for plain gold or platinum bands, or for ones with small diamonds in them, when comparing physical stores to online ones.  Also, the quality matters much less for small diamonds (but make sure they are shaped nicely, clear, white and sparkle well.)

For men, decide whether you even care about having a precious metal band, or if you’d rather go for cheaper, sturdier metal (gold is fairly malleable and can get dented, especially at high carat levels like 14K or above.)  Tungsten is one popular alternative, and can be bought for about $60 (6 mm thickness) online versus $150 for a 6mm 10K gold band.  Gun-metal gray titanium costs even less than tungsten (and feels light and cheap in your hand as well…)

Should you insure your ring?

The general rule of insurance is if losing something would cause you great financial pain to replace it, insure it.  Factored into this should be how careful the lady will be with her ring.  Is she the type that’s constantly losing her keys, cellphone or purse, or will she always keep her ring cemented solidly to her finger wherever she goes?

I would say that if your ring would cost you less than $3,000 – $4,000 to replace (at today’s market prices), and if you can pony up that dough without being sick or missing meals, you could consider skipping the insurance.  Anymore than that and it’s probably wise to add it to your homeowner’s or renter’s policy.  (Make sure the coverage is high enough and covers all possible loss scenarios, not just theft.  Jewelry is often listed as a separate item on homeowner’s policies and given a low dollar limit, typically $1,000, as the default.)

Alternatively, or if you rent and don’t have renter’s insurance, you can purchase a separate policy for the ring alone.  According to this, insurance will cost you between $0.30 – $1 per $100 of insured value, with some minimum premium per year.

Another way around needing insurance is to tell your loving wife that this is the only engagement ring she’s getting, so she had better keep track of it…

(My wife and I each have inexpensive ‘travel’ rings that we wear when going on trips to avoid the risk of losing our ‘real’ rings in a foreign locale.  [I got a titanium one for $15 on ebay.]  We leave the expensive hardware, along with other valuables, locked up in a safe while we’re away from home.)

– Happy shopping!

P.S.  Don’t forget to get down on one knee when proposing, you cad.  And for God’s sake don’t do it at a football game or the sports bar where you first met.

NEVER EVER EVER buy anything from Toshiba!!!

Bad product + TERRIBLE customer service = unhappy customers; see below for more details:

I bought a Toshiba DVD player off Amazon.com for $40 (it had a rating of 4/5 stars; not bad.)  It failed after a measly 6 months of moderate to light use.  (It wouldn’t play ANY disc.  The Toshiba repair FAQ had one piece of advice: unplug it for 3 minutes, then plug it back in.  As brilliant as that repair sounded, it didn’t fix the problem.)

I emailed Toshiba and explained the problem, providing model numbers, purchase dates, etc.  They informed me that, since the item was out of the 90 day warranty, I could exchange the player for a new model for only…. get ready… $50!  SERIOUSLY?  $10 more than I paid for my original player and $20 more than what I could by the new player they were offering me on Amazon?  Okay, someone needs to take Econ 101 at Toshiba.

Anyway, they provided a customer service number for more ‘help’, so I called it.  After struggling through automated messages telling me to answer all the questions I already answered via email (with no ‘dial 0’ or ‘operator’ function to get a live human) for 20 minutes, I finally got a low-level goon on the phone.

I explained the problem and asserted that even though my unit was out of warranty, it would seem like the decent thing for Toshiba to either 1) refund my money, 2) send me a replacement DVD player or 3) fix the unit for free, given that their product completely FAILED after only 6 months.  Although the customer service woman agreed that 6 months was ‘not typical’ (I don’t really believe her since 10% of reviewers on the Amazon.com site appear to have had the same problem), she told me there was nothing she could do.

If you’ve ever dealt with telephone customer service, you know that only a ‘Supervisor’ can fix a problem, so she offered to connect me to a supervisor and I accepted.  After putting me on hold for another 5 minutes, she came back and told me that, because my item was out of warranty, NO SUPERVISOR WAS EVEN ‘ALLOWED’ TO SPEAK TO ME.  Que pasa!?  Seriously!?  I was stunned.  Toshiba won’t even allow customers with failed products that are older than 3 months TALK to a person that might potentially be able to solve their problem.

Never have I had a customer service group refuse to speak to me about a problem.  That’s their @#^%@ job!!!  Anyway, after I clarified one more time with this customer rep that Toshiba would rather lose a customer for life (and have that person tell everyone they know to avoid Toshiba products) than pony up a $30 DVD player, I hung up and ordered a Philips DVD player.  (The woman assured me that it ‘wasn’t the money’ that Toshiba was concerned about, so I assumed it was merely a policy of personally insulting customers by refusing to help them when Toshiba products fail.)

The lesson: AVOID TOSHIBA PRODUCTS LIKE THE PLAGUE.  Be very afraid of a company that has the unique business strategy of producing defective products AND failing to fix problems (or even allow empowered employees to speak to customers about fixing problems) when confronted with persistent customers.

Every company makes products that fail from time to time (some more than others), but the difference is made when good companies have policies in place to help customers with failed products or services.  Based on my experience, Toshiba is not a good company…

Guide to buying and owning a car

I'm lovin' it

Consider total costs of ownership

Make sure that when you shop for a car you consider not only the price (negotiated as low as possible, using this recommended service),  but also financing (loan interest), maintenance, gas mileage, how long the car will last, what it will cost you to insure it and headaches (i.e.: things that will annoy you about your vehicle because it breaks down, doesn’t attract enough chicks, etc.)

Buy a used car (and try to pay cash for it if you can)

A new car loses about 15% of its value the minute you drive it off the lot, and much more after the next couple years.  Since that’s the case, it makes better financial sense to buy a used car, even if it’s relatively new (say, 2-3 years old.)  I also recommend saving up and paying cash for your car.  This forces you to care more about the price, since it’s painful to pay that much money at once.  In addition, you save a bunch by eliminating the costs of financing.  For example, a 10 year loan for $10,000 at 7% would cost you about $4,000 in interest over the life of the loan.  That’s 40% tacked on to the price of the car!

For new or used car buying info, check out the Motley Fool’s guide, and also prices on Edmunds or Kelley’s Blue Book (although I find that the blue book values tend to run a little high.)  If buying used just isn’t for you (Ramit Sethi makes a good case for new cars here), at least follow the next rule:

Drive your car until it has at least 200,000 miles on it before getting another one.

Consumer Reports estimates that you’ll save the price of a new car by driving your car into the ground.  Implicit in this rule is that you must have a reliable car that will last you this long.  Toyota and Honda* both make moderately-price vehicles known to reliably last this long (although the American companies have narrowed the gap in the last 10 years or so.)

Read the owner’s manual and keep up with maintenance to keep your vehicle running well.  (Washing & waxing your car, plus keeping the inside clean, will make it look nicer too. This may encourage you to avoid ditching it just to have the latest model.)

* From Consumer Reports:

Consumer Reports’ “Good bets” for making 200,000 miles: Honda Civic, Honda CR-V, Honda Element, Lexus ES, Lexus LS, Toyota 4Runner, Toyota Highlander, Toyota Land Cruiser, Toyota Prius, Toyota RAV4

Consumer Reports’ “Bad bets” for making 200,000 miles: BMW 7-series, Infiniti QX56, Jaguar X-type, V8-powered Mercedes-Benz M-class, Mercedes-Benz SL, Nissan Armada, Nissan Titan, Volkswagen Touareg, V6-powered Volvo XC90.

‘Kias Suck’ or ‘Why You Should Pay for Value’

Ever wonder why Kia cars are so cheap?The above is an interesting graph of car reliability.  It’s no surprise that Japanese automakers lead the way, but I was surprised that the American manufacturers aren’t too far behind (~25-30% more problems.)  Kia still seems to be WAY behind the curve… (apologies to my Korean in-laws.)

Does anyone know how Hyundai stacks up?  If so, please post a comment with some data.

It’s good to keep things like this in mind when buying anything you want to last or use a lot.  The general lesson is to consider total costs of ownership over the lifetime of your purchase (not just the original purchase price.)  This applies to thinking about future car repairs as well as dry cleaning costs & time for dry clean-only clothes.

Remember that a low up-front price doesn’t always mean less costly over the long term (that’s a lesson that a cheap bastard like me still has problems learning.)  Value is what really matters; a combination of the price you pay and the quality you get.  As I’ve gotten older, busier and more crotchety, saving time & headache has become more valuable to me.

In light of all this, I recommend buying quality, hassle-fee products & services, and keeping those quality items for as long as they’ll last.  It’s better to own fewer items that you’ll really love and use rather than a lot of cheap stuff that wears out or needs to be constantly replaced or maintained.  This rules goes for clothes, cookware, cars, etc.

Good deal on good kitchen knives

Okay, so this is kind of a random post for a personal finance blog, but one way to save money is to cook for yourself. To do that, you need some good kitchen knives.  90-100% of those knife needs can be handled by 2 implements: A Chef’s knife and a paring knife.  I recently came across a good deal for 2 high-quality versions of each (both of which I’ve purchased; they work great!)

Make sure you get a sharpening steel as well, like this one from Chicago Cutlery or this one from OXO.  This is so you can sharpen the knives yourself when they inevitably lose some of their edge.

Here’s a useful site that discusses how to pick good kitchen knives.  He goes over the various types of steel, but I haven’t figured out how to know which knives contain which steel!

3.25″ Paring knife:

paring knife

8 Inch Chef’s knife:

chefs knife

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