Seventh of Eight Great Money Habits

This is the seventh of a series of eight articles I'll be writing on the eight great money habits I encourage in my students and my clients.

Today's thought is "Eliminate Unnecessary Expenditures."

This week, it's my Dad I'm citing. On the wall of my office in Springfield, I have a poster from the Metropolitan Museum of Art that I received from a boyfriend in 1982. It's a lovely poster, but what's important is the frame in which it hangs. After this young man and I broke up, I really wanted to put this poster in a frame, but was horrified by the prices of frames in stores, either pre-made or custom. I despaired of ever finding a frame that I could afford. Then one day, at school, yet another vendor had set up their wares in the Student Union, and this time, it was cheap art. A framed poster of some flowers caught my eye -- not because I liked the flowers, but because it seemed to be close to the size I needed. I spent my last $5 on that poster, brought it home and put my precious Asian cat poster in it. It wasn't an exact fit, but it made me happy.

Some years later, I was living outside of Trenton, and had it hanging in the stair well which led to the outer door of the apartment. My father dropped some things off for me, and saw this as he was leaving. He was angry. Angry that I had spent my money on something so frivolous. Angry that I was always stretched for cash. Angry that I was always working so hard for every penny and had wasted money on something that didn't put food in my mouth or fund my ongoing schooling. It didn?t matter that I had purchased this four years earlier -- what mattered was that I had wasted money. His anger and frustration broke my heart. I felt that I was unable to ever meet his standards, or to live up to his expectations. When I calmed down, I renewed my determination to prove myself both at school and financially. He's been there for me so many times over the years, I hope that he knows how hard I've worked to earn his approval. And, I hope he knows how much I love him and value his opinion. That cat hangs in my office to remind me that every minute, every penny counts. I hope I keep that thought in mind for a very long time.

Unnecessary Expenditures -- what exactly does this mean? It means spending money on stuff that you not only don't need, it means spending money on stuff that does not in any way benefit you in any way.

For many years after college, I worked for the phone company. Okay, so it wasn't my Dad's phone company, it was the post-divestiture phone company, and then it was a competitive phone company, and then it was an independent phone company. I worked all over the industry. That, however, isn't the point. The point is that I spent many years in finance and in marketing. We knew that it was really easy to sell packages of products to college students. These packages cost us nearly nothing to offer, and college students would think they were getting a great deal, getting eight or twelve services for the price of four individual services. The truth of the matter was that these same customers might have used two of those services, and we made money. How often do we, as consumers, fall for these sorts of "great" deals? Take a look at your phone bill. Do you really use call forwarding? Do you even know how to? Would you ever want to?

This week's challenge is for each of you to take the time to really examine what you get from each of your vendors? Do you have a digital converter on your TV from your cable company? Why? Do you watch lots of pay-per-view movies? Or did you get it because you thought you needed to in order to receive digital television? If it's the latter, get rid of it. The signal from your cable company is already converted. Do you have subscriptions to movie channels you don't watch? Do you have lots of extra minutes on your cellular phone bill "just in case"? Do you have inside wire insurance from your telephone company "because you never know" what will happen? What are you paying for that you will never use, need or want? Why are you doing this?

Before you start this process, you need to know that we all fall prey to this. We all buy things we think we might someday need. We all have fallen for some marketing ploy at some point in time. There's a lot of psychology that goes into marketing and sales -- that's what those folks are paid for. You won't be the first, and you won't be the last. Get over it, and decide what you want to do about it. Let's just make it something positive.

Let's start with a review of your budget and forecast. What opportunities do you see? What patterns concern you? Then re-review everything and decide where you can make intelligent cuts. What can you live without? What have you never used? What are you legally required to maintain? What can you juggle around to make your life easier?

Some examples may include a newspaper subscription that you bought because your son needed them for class assignments. Since school is ending soon, perhaps this is something you can give up. Another might be a gaming website like World of Warcraft -- it was fun at the beginning, but perhaps your daughter can give it up or start doing odd jobs around the neighborhood to fund it herself. Do you really need to rent twenty movies a month from Netflix or would it be easier (and cheaper) to get something from Redbox at Walmart? When's the last time you watched something on HBO at home? Do you really still need that subscription?

Or maybe you've been getting mani/pedis every week for the last ten years. You don't know yourself without gorgeous nails. But, do you really need to spend this money every week? Will you be less of a person without this? Does it really matter if your roots are three quarters of an inch long instead of only a quarter of an inch? Does your intelligence depend on your appearance? What luxuries can you forego or delay to achieve a short term gain that will have long term positive consequences? What bills can you pay if you have boring nails for three months? What school sport can you fund by putting off the cut and color for one month? A little discipline now and then turns into a long term habit of thinking before you spend. Sounds miserable, doesn't it? But then again, if you start examining your motivations and begin to understand what truly brings you joy, you start to really enjoy your life, and your choices.

As I'm always telling my clients, examine everything thing in terms of Obligation vs Option. What do you pay for because you feel you have to? What do you really need? Simplify your life, and spend only that which you must. More and more, people are realizing that they don?t need things to fulfill their lives, they need meaning, and peace of mind.

Allow yourself to be patient and to be true to yourself. Remember to take at least five minutes every day to simply be by yourself and breathe. Allow yourself to indulge in a moment of thought, reflection and planning when the mood strikes. It's your money, your choice. Allow yourself to simply succeed on your own terms, to live in peace, abundance, and joy. One day, one decision at a time, remaining aware of your choices and your feelings. You CAN get there.

And, as always, if you need help, I'm available. It's what I do, and it's what I love to do.

Sharon.

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