You may find it difficult to exercise restraint when it comes to money because three variables come together to create a disaster. One is that the credit card has become the most aggressively marketed product in our culture. Second, our culture has become increasingly impatient. Third, we have become a very market-oriented society, surrounded with more images of what we “need to have” to be happy.
Improve Your Situation
To improve your situation, you must live on a written monthly plan—a budget. If you do, you might say, “Maybe I ought to be saving something. Maybe I can’t afford a vacation to Europe this year.” There are always trade-offs. The worst financial move you can make is to assume that you have to have debt to prosper. People who prosper avoid debt.
The Internet can be an awesome tool for planning and controlling your budget. The bad thing about the Internet is that there is impulse there to grab compulsive shoppers. But now when I go shopping for a car, I’m equipped with knowledge. So, it provides me with information when I am preparing to make large purchases.
If you have the discipline to pay credit card balances each month, you must have the cash. If you pay cash, you spend less because it hurts more. When you go to dinner and lay down a $50 bill, you realize you bought dinner. When you pay with a credit card, you do not emotionally register the expense and tend to spend more. Also, most people do not pay their plastic off every month, thus incurring debt and finance charges.
Avoiding Bankruptcy
Probably 80 percent of the bankruptcies that are filed don’t have to be. People freak out, get scared, don’t know what else to do. Finally they just lose hope. To avoid or get out of bankruptcy, you have to change the habits that cause the problem. Debt is really the symptom. The problem is living without a plan. So you end up buying stuff that you can’t pay for, or having emergencies for which you have no savings.
When you declare bankruptcy, your credit report is damaged for years, and it’s psychologically and spiritually traumatic. Financial failure is only when you quit. The trick is to have the overriding character quality of not quitting and learning from it.
Excellence in Action: Establish a budget and don’t give up.
