Second of Eight Great Money Habits

This is the second 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 "Debt is Rarely Your Friend."

There are times in your life when debt is a sign of strength, both personally and financially. The mortgage on your home is an excellent example -- well, it's an excellent example when that loan payment represents less than 32% of your gross income per month or no more than 24% of your take home income per month. Debt is something that can enable us to have a stable home life, a solid vehicle for transportation, or to replace appliances.

However, for most of us, it's been a way to enable ourselves to get things we want, we feel we deserve, or just to go from day to day. The media, it seems, is constantly providing us with reasons to buy more. We see people on TV, in magazines, on billboards, and on the web, living the good life, and we want to be there, too. Reality TV, especially, has driven much of the trend. We get to peer into the lives of the rich and famous and find ourselves wanting that leather coat, that granite countertop, that custom deck, that beautiful flooring, and we begin to rationalize expenditures. We're told that we must completely redo our kitchens at least once every ten years. We're told that without the right look, or the right accessories, we;ve allowed ourselves to stumble or fall behind. The lessons our grandparents and parents taught us based on their years of living through the Great Depression seem antiquated, extraneous and even unrealistic in our world.

However, living within your means, and honoring who you are through meaningful activities is not an antiquated notion. Have you noticed that when you get that next acquisition, there's always another one on the horizon? The race to catch up is succeeded by the race to keep up, and it is draining, spiritually, emotionally, physically, and most importantly, financially. It's time to sit back and take stock. What is really important to you?

The first piece of advice I give my clients is stop using your debit card. Leave it home, and only take it with you on vacation. Seems somewhat out of touch, doesn't it? I mean, it's so much more convenient that running to the bank and withdrawing money. And that, dear readers, is the problem. A debit card looks, feels, and acts like a credit card. It's shiny, easy to use, and pain free, until you bounce another check. It's not a credit card -- it's a very easy method for draining your bank account. Stop using it. Cash hurts more, and that's good. You want that discipline in your life.

So what is my alternative? Simple: one, always managed credit card, used in conjunction with that cash. Open your wallet. How many credit cards do you have? What?s their annual fee? What?s their interest on outstanding balances? How much do you owe on each?

You need to be very worried about all of those questions. Each credit card has a limit, and that limit shows up on your credit report. Every time you miss a payment, or pay the minimum, that has a negative consequence on your credit score. In my opinion, it is never a wise choice to have a retailer's credit card. They are simply too expensive, too open to abuse, and extraneous to your needs. Every retailer these days (including Sears, the old holdout) accepts MasterCard, and Visa, and often they will accept both Discover and American Express. My first credit card was an American Express. I was 19 years old, working full time, going to college, and trying to manage my expenses. I have no idea how I qualified for the AmEx, but I will go to my grave thanking the stars for that fortuitous occurrence. Do you know why? Because the green American Express card (the basic card) must be paid off, in full, every month. Talk about discipline! I learned very quickly that this was not as easy as it sounded, so I carefully kept track of every cent I put on that card, and never missed a payment. Never.

Now that I'm all grown up, I have one MasterCard (from a major financial institution), linked to the Frequent Flyer program of my choice. I do not have any retailer's cards, and my debit card almost never leaves my house. The MasterCard is paid in full, every month. Yes, that means that some months, I have to put off food buying, or gas purchases, or other purchases for a week or two. Yes, that means my family gets to eat creatively crafted dinners that include whatever's in the pantry or in the freezer, whether or not it makes sense. Yes, it means I plan everything very carefully. The upside is that I maintain my payment schedule discipline, and I never exceed my monthly budget.

Choose your credit card and your credit card provider carefully. Take the luxury of time to investigate policies and practices for each of several providers. Always go with a large company, since they have the resources to support them. Select a vendor with good fraud protection and notification that comes with the card. My vendor calls me within 24 hours or less when a sudden change in spending patterns occurs. Sounds very creepy from the Big Brother point of view, but at this point in my life, I?d rather be safe than sorry. Keep track of your expenditures, and commit to pay the card off monthly, once your decision is made.

What to do with the other cards? Cut them up. Pay them off. Pick a luxury you indulge in monthly, and put it off until these cards are paid off, using the money that would otherwise go to that item. Put off having your nails done, put off having your hair done (yes, you will survive roots), put off going to the dog groomer and brush the dog out yourself: every little bit helps, and the financial freedom is worth far more than the pain of a foregone luxury will cause. Monitor your spending habits and find opportunities for success and achievement. They are always there.

Speaking of financial institutions, let's look at your bank. Are you banking with one that allows you to link your savings account to your checking account? Do you have overdraft protection? Do you watch your balance online daily to ensure that you know what checks have cleared, and what's still outstanding? Do you still float checks, hoping that you won't trip yourself up again? Do your research and select the right bank for you -- credit unions tend to have very customer centric programs and offerings, and they tend to be very stable.

This all comes down to one thing. You are in charge of your money. You may be in a situation that you didn't create, but it is still your problem. You can deal with it successfully, if you take the steps necessary, and are patient. It could take months to slowly restore your confidence, and to establish new healthy spending habits. But, the increase in your credit rating will always be worth it.

Allow yourself to be true to your goals. Allow yourself to take a deep breath and take a break. Allow yourself to be selfish and not spend money because someone else wants you to. Allow yourself to skip an indulgence because it will mean great rewards in the long run. Allow yourself to succeed on your own terms. You have the power, the choice and the freedom to live in peace, abundance, and joy. One day at a time, one decision at a time, 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.

Hypnotherapy can help you to think healthier, happier, and more successful thoughts while adding the power of relaxation to your life. As you go through your day, you feel better and perform better.

Contact us to learn more about how hypnotherapy can you propel you toward a healthier, happier lifestyle.

Hypnosis or Hypnotherapy, in any form, does not diagnose, treat or cure mental or emotional problems, and is not a substitute for other professional help.