Common Problems Part 3: Lack of Self-Discipline

I've been here too. In fact, this is where most problems begin. This is when you have no control over how you spend where you spend or how you spend it. A lack of self-discipline usually spills over into other areas of your life, and is debilitating to gaining ground in most endeavors. The Army fixed this problem for me, but I'm sure there are easier solutions than enlisting. Most of us don't even realize we lack self-discipline until it stares us right in face after some major life altering event. Either way, yoiu need to get this in check before proceeding.

Common Problems Part 2: Keeping up with the Joneses

Boy does this one get a lot of us! It's also called maintaining the social norm. It's based on the false pretense that the things you have are a measure of your success. Who is more successful in your mind? The family who has two cars, an expensive home, a boat and any number of other toys; but secretly would lose it all if they missed one paycheck? Or the family in a modest home, one practical vehicle, no toys, however this family has no debt, and could weather all but the worst of financial storms with the money they have saved.

I know, I bet that first family has a lot of fun. But can you imagine the stress they feel every time there's rumor of layoffs at their jobs. Or when they look at the amount of debt they owe, and how long it would take to pay it off? Maybe this is you, Overwhelmed with the mess you found yourself in, and despaired because you can't find your way out. There is Hope for everyone, but don't think it comes without cost. Everything has a cost. Pride will be swallowed, and I know it's not easy.

One thing to keep in mind, 99% of all those people who seem to have everything, and are wealthy and successful are living a lie. They are up to their nose in debt, and will likely die in debt, and will leave their debt to their children. That is of course, unless they make a drastic change in their lives.

Common Problems Part 1: Can't Say No

Here is a very tricky situation I found myself in when my wife and I first started managing our finances: My wife couldn't say no. You see when we first married we had made a decision for her to raise the children, and manage the household, while I went out and earned the money. She did a wonderful job at everything, except managing money. She could never tell me no even though she knew that the things I wanted we could not afford. The turning point was on my birthday one year. I had been needing a new radiator for my truck (I'm a car guy). I had found a very nice scratch and dent model at a local radiator shop for far less than one could be had anywhere else. She knew we didn't have the money, but let me buy it anyway. The next week I found out that that purchase had overdrawn our account, and that we were in the negative a little over 200 bucks. At the time that kind of money was hard to come by. I was furious! We had a huge fight, and I took away her responsibility over the finances. She thought the gift would make me happy, but instead it hurt our relationship. It was a turning point, but that radiator will not be forgotten.

The point is say No! However you must, you have to choose your families financial well-being over the whims and wants of those you love. Think of it this way, is giving in to your loved ones every request at the expense of their financial security really loving them? The answer is no, it is not. So don't fall for this trap.

If you find that you are unable to say no, please relinquish your responsibility to someone who can. You will be much better off in the future.

Investigation

Investigation described simply, is drawing conclusions from observation. You should now have some observations made by looking at your monthly cash flow sheet from earlier. Did you spend Waaaay too much on dining out? or did movie rentals eat a lot of your money. Video Games for the Kids? Perhaps you have noticed some trends, does your husband always get what he wants? or do you just put it on the credit card because it seems more convenient?

Pay attention to how you spend money everyday. The situations, and what motivates the purchase. The more you observe, the better conclusions you will make. What are you triggers? When the kids whine and cry in the grocery store, do give them what they want just to placate them? Does your Husband make online purchases and forget to tell you? Observe everything.

What's Your Problem?

So after finding out where your money goes, did you think about why it's going where it goes? I had a big problem with my finances, I had no idea what I was doing with my money. So I spent it on things I thought I wanted, and racked up debt, and did what it seemed everyone else was doing, and never had a second thought of where my money went. Of course, we all now we see that this was not a sustainable plan for the all too uncertain future. My problem was ignorance. Some people can't can't say no to their Spouse or Children. Others simply haven't developed the self-discipline to manage finances successfully. I had all of these problems too, but my ignorance was a far bigger problem. That's because it muddies the water, and you can't truly see what problems lie underneath. Dissolve the ignorance first, and the other problems will become much clearer.

Where's My Money Going?

Most people don't sit down and take a look at where their money goes, simply because they don't want to know how much trouble they are in. It is a look in the mirror and can be quite an emotional experience. Not as bad as finding out exactly how much debt you have, but tough nonetheless. If you don't know where your money is going, you need to find out if you ever expect to get on top of it! My advice is to get a computer program to help you. I bought a copy of Quicken on EBay for a little over $20, but you can do it for free on paper or you can use excel spreadsheets. The point is to do it.

To start, get all your bills, receipts, bank statements, paychecks and anything else pertaining to your finances out for the past month. Add up all your money that you have made and write that number down. Then add up all the money that you spent(including credit card purchases) and write that number down. If the money going out is more than the money going in, you have to change your spending behavior immediately!

If you don't have records of all of your transactions from the last month, then start keeping track now. I have a special pocket in my wallet that only receipts go in. At the end of the day or couple of days, I pull them all out and put them into Quicken. I ask for a receipt for everything! If I can't get one, I ask for a piece of paper to write it down.

Next put all of your transactions out into categories by what was purchased. There are two major Categories that all the others fall under; indiscretionary, which means you have to pay them in order to survive/maintain your quality of life, and discretionary, which means your life could continue without it. For Example:

Indiscretionary
Mortgage
Utilities(not cable and satellite)
Groceries
Fuel
Car Payment
Anything required to fulfill your job duties

Discretionary
Dining out
Coffee
Cable
Movies
Jewelry
Beer/Wine
Cell Phone(you can survive without one)

If you aren't sure if something is discretionary or not, try to live without it for two weeks. If you don't die it's probably discretionary.

You should have a good Idea of where your money is going now. Once you have done this, you should have a pretty good idea of what you need to do next.

Rich or Poor is Not About Money

Rich or Poor is a frame of mind, not a set of circumstances. How many rich people have you heard about who who lost it all, only to become more wealthy afterwards? Better yet, how many poor people have won the Lottery, only to be poor again six months later? So with this in mind, you have to get your head right if you want to get your money right.

Problem Solving

Here is a practical guideline to solving any problem you may have, be it financial or otherwise. I am sure this is in an elementary schoolbook some where, and if not, it should be.

1. Recognizing the problem
2. Investigating the problem
3. Assessing possible solutions to the problem
4. Creating a plan
5. Implementing the Plan

I will go into greater detail on each step later. Stay tuned!

About Me

I am no one particularly special, no financial adviser, economics guru, or even college graduate. I am just an ordinary man, with a wife and children, trying to share what I have found out about money and it's use. I got sick and tired of making money, according to some more than I ought to, and having very little to show for my efforts. I started reading, learning and doing what I saw to be the best course of action, and now with the "economic crisis" I think the things that have worked for me and my success may be an inspiration to others. I enjoy feedback, and would like to hear your advice, success stories, or questions. Drop me a line anytime!

Where to Start...

Where to start is sometimes the biggest stumbling block, but you already have by reading this! Cheesy but true, you have recognized a that there is a problem with your finances and are seeking help! The first step in any problem solving process is determining the root of the problem. This is quite difficult for most people because it strikes a chord in our hearts that we are doing something wrong, or have let down those important to us or any number of uncomfortable emotions. This strong tie to emotion that money has over most of us is difficult to overcome, because money is so important to our livelihood, security, and happiness. Just to be certain, money does not cause this, our views of money does. Thus, the goal, freeing our emotions from our money. This is also the most difficult thing most of us will ever do, I still haven't accomplished it, but I have a plan.