From Mark Zaifman's Blog

www.spiritusfinancial.com

"When it comes to managing your personal finances, spending, particularly overspending is one of the most challenging aspects of living within your means. It’s not that you don’t have good intentions, because most people really do want to stay on a spending plan, it’s more complex than that. Spending money causes an emotional rush in our bodies. It’s a natural high. It’s short term pleasure for what could turn out to be long term debt. It’s the nexus between money and your emotional intelligence (EQ) that often creates the problem of overspending.

Create a speed bump on the road to spending

Each time you wake up and go to work, you’re making a conscious decision to trade your precious life energy, the limited time you have on this planet; and trade that time for money. That’s a powerful decision with huge impacts on your lifestyle. Are you receiving the highest amount of compensation possible for the exchange of your precious life energy?

Now take it one step further. You’re hearing about the new 3D TV’s that are about to hit the consumer outlets later this year. Let’s say these new TV’s are going to sell for $4,200 each. Gulp! is your first reaction. Second reaction is how cool it would be to have that TV to watch movies on. Then you think about the cost. Well, you say to yourself, I just received that 1.99% 6 month interest offer on my credit card, I’ll put it on my card and pay that sucker off in 6 months-no doubt about it. Next comes the purchase and the amazing “sugar high” you feel throughout your entire body when you sign on the dotted line. And the finale is the hangover that occurs later when buyer’s remorse kicks in and you wonder why you just spent that kind of money on a consumer item.

Here are some suggestions on creating a speed bump to at least slow down the momentum on your potential road to purchasing an item. First, make sure you avoid impulse purchases. These are usually emotionally driven and tend to be the reason most people suffer buyer’s remorse. Stop yourself before making the purchase, and give yourself a cooling off period for at least 24-48 hours. If, after that time, your purchase still feels right, at least you’ve given yourself time to really think it through.

Second suggestion is to calculate how many hours of work it will take to make this purchase. Don’t use your gross hourly rate, instead be honest and use your net hourly wage, taking out taxes, cost of commuting, clothes, etc. Then say to yourself, is it worth trading x amount of hours of my life energy for this purchase? This exercise has usually stopped me dead in my tracks when I’ve been tempted to exceed my spending plan.

Keeping yourself honest

Making a new year’s resolution to stop overspending or even creating a “budget” are all good things on the road to living within your means. But even with the best intentions, it’s harder than most people think. The only true solution to the problem of overspending is to develop the discipline to stay within a  spending plan. Otherwise, consumption quite naturally becomes excessive, and the rude awakening arrives with the monthly statement.

To guard against overspending, I recommend creating and maintaining a credit card expense journal, which is similar to the check stubs in a checking account. Keep a weekly running total of credit card expenses and deduct the end-of-week total from your checking account balance. Then when your credit card bill arrives, you have already deducted the expenses out of your checking account and you’re able to pay your balance in full that month. If you’re unable to pay the full balance off each month, that’s ok short-term, but realize that month you borrowed money and you didn’t live within your means. If this occurs for more than 3 months, you have a trend that needs to be looked at closely.

Increase your money consciousness

Awareness into your relationship with money is one of the greatest gifts you can ever give to yourself. Does it take courage to look inside and understand what’s causing the fear, anxiety, overspending, under saving, under earning, conflicts with your spouse/partner, etc-you bet it does. Yet at the end of the day, what most of us truly want, is not the house up on the hill, or the latest sports car or other material possessions, and yes, many of us desire these items, but at our core, what I would argue we’re all really in search of is peace of mind.

It’s the feeling that your financial house is in order and you feel at peace with your money and your life, you feel secure about your future. And security in regards to your finances is a big thing. When you feel out of sorts with your money, and especially about your financial security, you’re causing yourself undue stress, which can ultimately lead to illness and even disease. Nothing can be more important than your health.

If money has often caused you stress and anxiety, tell yourself this year will be different. Become fearless. Summon the courage and look inside at what’s causing you to feel the way you do. Monitor your thoughts carefully. Remember, as you think, so shall you be.

As you embark on this journey of self-discovery, know that what’s waiting for you on the other side is financial freedom. This feeling of liberation is worth its weight in gold."