Life Lessons in the Real World

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Control Your Spending

spending.jpgDo you know people who spend and spend even when they are broke?

One woman I know had a habit of maxing out her credit cards on luxury items and then complaining about her lack of money. She was perpetually two months late on her utility bills, but that never stopped her from charging a shiny new purse or whatever else she just had to have.Her home was in foreclosure.  She was in real danger of losing her equity and ending up on the street. In the midst of this financial hurricane, her car broke down. Her mechanic said the cost of repair exceeded that of replacement, so on to top of everything else, she suddenly needed to come up with enough money to buy a new car.    

But she didn’t feel bad.  After all, this was an opportunity to go shopping! She hit the used car lots on a beautiful Saturday afternoon and quickly narrowed her selection down to two vehicles, the first an affordable economy car, the second an expensive SUV.  Which do you think she bought? That’s right, the SUV.

When gas prices rose in 2006, she could barely afford to drive to work. As of the date of this writing, she sometimes has to stay home because she cannot afford to refuel the monster sitting in her driveway.  

Necessity vs. Desire 

You cannot be financially mature until you clearly understand the difference between necessity and desire.  This woman needed transportation, but desired a status-symbol.

Trouble with Credit Cards 

Many people get themselves into trouble with credit cards.  The #1 mistake they make is treating their line of credit as income supplementation.  So let’s agree right here that credit cards are not part of your income.  That line of credit? That’s not your money.  That money belongs to the lending institution, and you will have to pay it back.  If you have a habit of getting in over your head with those little plastic cards, remember my motto: If you can’t afford to buy it with cash, you can’t afford to put it on the card.  Period.

If you’ve proven you can be responsible with plastic, you have additional leeway; otherwise, heed my motto. If you absolutely must charge something you cannot afford due to an emergency, check out my credit card article for additional advice.  

Spending money you don’t have is like running with scissors or sticking your fingers into an electric outlet. If you’re like most healthy adults, your mother no longer warns you not to do stupid things.  So who is going to stop you from getting in over your head? Who is going to stop you from allowing your obligations to exceed your capacities? You are. That’s who.

The stress that results from overextending yourself stems from two basic causes: spending too much, and doing too much. Spending too much, the obvious affliction effecting our friend with the SUV, involves the purchase of items you cannot afford. Doing too much involves the overcommitment of cognitive, physical, or emotional energies. To keep from getting in over your head in either of these two areas, listen to your stress triggers. And learn to say No.

You are Reading an Article Series — Rescue Your Life From Stress!

  1. Series Intro: Rescue Your Life From Stress!
  2. Debilitating Stress, a Warning You are Out of Balance
  3. The Key to Building a Strong Personal Foundation
  4. Control Your Spending
  5. The #1 Mistake Consumers Make with Credit Cards
  6. 3 Steps to Reducing Stress Caused by Unnecessary Obligations

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