"The Way You Do The Things You Do"

I am a big fan of Suze Orman, as I think I have already told you. I particularly enjoy her conversations about how the events in our lives impact our financial choices. She is actually participating in a bigger conversation where people in different professions discuss the emotional component of our money.

To illustrate my point, I'm going to give you a fictionalized account of a conversation I have had with many (usually, but not always, female) clients.

"Peggy, I don't know how I got back in debt. I had paid everything off, and suddenly the debt is back."

To which I say something to make them feel better (because they are already beating themselves up; I don't need to help). Then, I start asking questions about how life is--work, relationships, attaining goals, etc.--and because I work from the beginning to establish a position of trust, they tend to tell me the truth. 99.9% of the time, something is going wrong somewhere else in the person's life. When I ask about the timing of this other event, it nearly always coincides with the reacquisition of the debt. Why? Because our relationship with our money is impacted by our relationship with other things.

Not only that, once it starts going wrong, it gets worse. Think about the last diet you tried. Somewhere along the way, you ate something not on the "approved" list. What did you do? Well, I have a tendancy to eat everything in sight for the rest of that day. Once I've made a mistake by eating the donut at the office for breakfast, I might as well have fast food for lunch and buttered popcorn that evening as I watch television. I reason that if I've already messed up, what's the point. Well, people make this same mistake with their money. If they make a mistake and buy something they didn't need, they rationalize that they might as well buy two or three other things as well.

Suddenly, you're spiraling out of control. Diets don't work, and budgets don't work, either. They are lifestyle changes.

I close with two pieces of advice: if you're wondering why the debt won't go away, look at other areas of your life. Sometimes, when those situations can be resolved, the money problems resolve themselves. The second piece of advice is whether you are on a diet or a budget and you make a mistake, forgive yourself. Don't compound it out of guilt.

Be prosperous!
Peggy Doviak

Personal Cash Flow (We don't like budgets)

Yesterday, I told you that you would have an easy task today, and it's easy, but it will take you a little time to complete it!

I want you to write down every dollar you spend and what you spent it on for one month. I had a client return one time after completing this task, and $2,000 was labeled miscellaneous! Now, I don’t mind if just a little bit of money isn’t categorized, but $2,000 in misc. is a cop out. You need to be honest about how you spend your money. Remember that these are your cash flow decisions, so don’t worry about making me (or somebody else) mad. If you don’t do this honestly, it won’t work.

If you use an ATM card, the withdrawal isn’t the transaction, it’s what how you spent the money. So “ATM” isn’t a category either! If you have a weakness for $5 lattes, write it down. If you like electronics, write it down.

I don’t want you to judge yourself while you do this. There are no wrong answers, just an honest look at where your paycheck’s going. I told you it was easy. Tomorrow, we’ll figure out why this is so important…..

Be prosperous!
Peggy