I was listening to CBC the other day and was shocked by what the host said. According to him, if you paid the minimum balance on a $5,000 visa bill, it would take 17 years to pay it off. That’s a lot of interest.
This point really resonated with me because at the start of the New Year, a number of clients hire me, primarily for one reason, to help them get their financial houses in order. They come almost at the breaking point under the strain of keeping up appearances despite their secret life of large lines of credit, unpaid visa bills and years of unpaid taxes.
Do you, like them feel overwhelmed by the weight of your consumption? Do you, like them, feel the subtle and not so subtle pressure that our consumer society puts on us to keep up with those fictitious Jones, so spend, spend, spend? Do you, like them, KNOW that the weight of your guilt is making you feel more and more pessimistic about your future, financial and otherwise?
If I’ve just described you, here are some suggestions as to how you can avoid the all-too-common January hangover of debts from Xmases past. (And remember, with current interest rates, these debts just keep giving and giving, as the $5,000 Visa bill example so aptly illustrates.)
Only pay cash for your presents. I know this seems radical in our world of instant credit, but by only using your debit card, or only paying cash, you’ll reduce your impulse buying and keep your buying in check.
This next suggestion is for those who suffer from a severe case of “creditcarditis”. Get a metallic can, fill it with water, add your visa card and put the can in your freezer. The fact that the can’s metallic means that you can’t defrost the can in your microwave, no matter how much you want to. (One of my clients actually tried.)
Tell those in your inner circle why you’ll no longer be buying them presents. Be transparent with those you trust and suggest instead that you share some quality time. Many will be relieved and follow your lead with their inner circle.
Instead of spending money on a gift, give the gift of your time. Offer to babysit a friend’s children, so her and her husband can enjoy a date night. Or run errands for a house-bound senior.
Make your presents instead of buying them. In our time challenged society, there’s nothing nicer than getting a box of home made cookies, some antipasto or a can of pickles.
Reject the need to run out and buy someone a gift just because they’ve gifted you. Instead, learn to become more gracious at receiving.
Put a limit on what you’ll spend on a gift and let others know what it is. Many families do this.
Another family tradition that’s really popular is drawing names so that family members don’t have to buy for all. This is a great idea, especially in large families.
While controversial with some, re-gift what you don’t want or need. There’s a reason that the saying, “One man’s junk is another man’s treasure,” is so popular.
To use a mixed metaphor, remember this. It doesn’t matter how much alcohol you drink this New Year’s Eve, if you went on what I call a spending bender over Xmas, you’re still going to feel a financial hangover in the New Year.
Take Action Now!
If you want 2011 to be a great year, even your best year yet, use the simple strategies listed above to keep your spending in check. Pick one, find someone to be accountable to and set a deadline or doing it. You’ll find yourself in much better shape in the New Year.
Stop Worrying About Money and Start Managing It So You Can Become More Prosperous
Money, Money, Money was one of the 1980′s band ABBA’s more famous songs. Do you find yourself singing, or at the very least thinking along the line of the lyrics from that song? All the things I could do, If I had a little money, It’s a rich man’s world.
Worse yet, do you find yourself constantly worrying about money, or the lack of it, despite or because of our society’s easy access to credit? In our consumer oriented culture, where we are inundated with advertisements telling us that it is our God given right to own whatever we want, many of us find that our drive for success is overshadowed by our concerns and worries around money.
If I’ve just described you, you’re not alone. Social scientists tell us that most of us are living beyond our means and saving little for retirement. And if we need proof, we need look no further than America’s sub prime mortgage crisis to see that this is true.
Social activist Gloria Steinem is famous for saying that if you want to know what your values are, or what’s important to you, take a look at your cheque book. (Today’s contemporary version of that is looking at your Visa statement). So just what exactly are you spending your money on?
Years ago, when it first came out, everyone I knew was talking about the book, Your Money or Your Life, by Joe Dominguez and Vicki Robbin. They suggested keeping a diary for a year of every penny you spent, to get a better understanding of where your money was going. Yup, every last penny.
While I only did it for six months, it was an eye opener. When I reviewed my spending, I started to see why I thought I didn’t have money for a vacation. The truth was, I did have money for a holiday, but I whittled away what could have gone there on magazines, which I love, lattes and coffee frappuccinos, etc. With that realization, I began checking out magazines from my local library, instead of buying them and I also bought my own espresso machine. The savings added up fast and pretty soon I was singing, “California here I come.”
The best thing about it was that I acknowledged my spending habits and became much more conscious about what I was spending in the moment, not later when the Visa bill came in. This is a great beginning, because being conscious about anything is THE first step to change. If your spending is out of hand, maybe it’s time to wade out of that Egyptian River called “Denial,” and look at where your money is going. If you don’t, all your psychic energy will be directed at worrying, instead of directed at creating success.
Take Action Now
To get you started, track what you spend for a week, then review. Look for trends. A client of mine who went bankrupt said after the fact that it was the $10 she spent on the way home from work every day that did her in and led to her bankruptcy. What patterns can you uncover?
Really, really look at every thing you’ve spent money on over the last week and see if each purchase reflects your values, or what’s important to you. If it doesn’t, ask yourself why you’re spending your money on that item?
Be creative, like I was around my magazine purchases. Instead of spending $7 on a video, get a FREE library card and see if the library has some of the videos you’d pay for at your local video store.
Wondering if it would be possible to go an entire day without spending money? Well, you can easily find out how difficult, or easy, it would be for you. Pick a day when you will not spend any money, nada. If it happens to be a day when a particular bill has to be paid, then by all means pay it. The challenge here is meant to save you money, not cost you money in late fees and penalties!
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