Another Year of Resolutions

It’s January. It’s cold. I live in the South. My backyard looks like a bobsled run. My dogs refuse to go outside because they can’t figure out how ice works (why should they be any different than the humans that live around here—think Atlanta on ice). However, all is not lost. I have a new LCD television with access to over 150 channels, a good heater and a remote that can take me to all kinds of exciting and interesting places. Life could be worse.

As I complete my third cycle through the channels (winter exercise) it hits me. January is supposed to be a time of reflection and renewal. For some reason, our culture has determined that it’s important to examine all our behaviors—even the ones that were perfectly okay in December—every January. I guess this is a throwback to some ritualistic cleansing our ancestors performed in a snow cave trying to make the sun to come back (remember, they did not have cable). I don’t know. However, based on my unique ability to analyze human behavior while simultaneously flipping channels, reading the paper, and texting I’ve discovered something interesting. We aren’t very good with money. We are also over weight, out of shape, and need a new car. Oh, by the way, did you know that a “Shamwow” can suck just about anything out of a carpet?

Since I’m so good with the remote, I’ve had the opportunity to observe countless talking heads and “designated experts” explain the virtues of New Years resolutions. I don’t know why, but it appears that we are only allowed to examine and reset our goals in January—go figure. From what I’ve seen and heard on television—you know it has to be true—if we miss this window of opportunity we are domed to slide back into our old and pathetic rut. And that means eleven more months of being broke, overweight, out of shape, and riding around in a bad car. No one wants to do that.

I’ve been working with people and money for years. This is what I’ve learned–money makes·me crazy! I have too many choices. I am·inundated with too much information. And my life is moving at warp speed. I bet I’m just like you. So in deference to Stephen Covey here are my Seven Habits of Highly Unsuccessful Spenders:

  1. I can do it just watch me. We are overconfident that we can control our spending. We think we can control our behavior—this time. We accept the teaser credit card application because we think we won’t use it. We buy “six-months-same-as-cash” because we know we’ll have everything paid off in time. Bad things—life—only happens to the other guy.
  2. I know I’m right and I can prove it. We rationalize and confirm our spending decisions. No one likes to be wrong and loss/failure emotionally hurts—a lot. We ask “experts” we agree with to confirm our spending choices. We discount anyone who disagrees with us. Over time, we can rationalize just about any spending decision.
  3.  I’m smart. We think the skills and abilities that have made us successful in one area will carry over to our spending decisions. I know a number of very smart and successful professionals who thought they could run a restaurant. They could not—regardless how good their mom’s recipe for pizza. We tend to confuse luck with being smart. Admit it, some of our buying choices worked because we were at the right place at the right time. Brains had nothing to do with it.
  4. This time is different. We want to believe that a bad spending choice in the past won’t happen again. It can and it may. We aren’t very good with figuring out risk and probability. If we were everyone would own life insurance and not more than 10% of their company’s stock. Remember, the group can be wrong—dot coms, housing, and so forth.
  5. It’s an investment. We as individuals have no control over the market price or rate of return of anything. We can ask a price for our Beanie Babies, gold plated coins, and collector’s edition presidential plates but the market will determine what they are·worth. Just because the guy on television says it’s a great investment does not make it so.
  6. I have enough time to get my spending under control. We never have as much time as we think. Compounding is our friend—if we use it. We seldom get a “do over” with our money.
  7.  I don’t have enough money. If we are really honest with ourselves, we have money. We simply don’t like to make the hard choices about our spending. Instant gratification is great. Our feeling brain loves it. However, we have to choose. Which is more important; the car that costs more than my first house or·being able to retire in the future?

Now, put down the remote and back away from the television. Spending money is hard work. Take time now and ask yourself; what is most important in life to you? What will it cost to get it? If I keep spending the way I have been, will I get it? Don’t worry, you can do this kind of planning any time of the year.

Money Made Personal – Ted