Saturday, April 08, 2006

What is your attitude about money?

Are you your own worst enemy when it comes to money?

Think about your financial choices lately? Are you in debt? Did you buy the house that you really can't afford? Do you throw the bills and hope that no one calls?

One of my favorite financial guru Dave Ramseys says:

It's become clear it isn't a simple lack of money that keeps people from achieving what he calls "financial peace." Instead, it's their attitude about money

Dave appear on CBS news early show this past week to talk about Financial Peace.

Dave says that there are 3 things preventing most people to acheiving financial peace:

Is your spouse aware of your debt?
If you have been watching Oprah's Debt Diet you have heard about Lisa Bradley. In order to purchase her pricey new truck, Lisa admits she forged her husband's signature. Now, she has $1,100 in car payments every month.

If you haven't told your spouse about debt, you're either scared of the consequences or don't think it's enough of a problem to address. Either way, your family can't achieve financial peace until you spill the beans.

Not knowing what you owe or having to defend your spending are also signs of denial.

Keep up with the Jones
We have all hear this phrase which really means living beyond your means. Your keeping up with the Jones if:
Buying stuff you don't need or you can't afford
Gifts or trips

Another couple on Oprah's Debt Diet who transitioned from a dual income to a single income and didn't adjust their spending (a.k.a Keeping up with the Jones). Instead, the couple purchased a brand new home they knew they couldn't afford. Their house payments tripled, and the couple says that's when they got into trouble. First, they cashed in the husband's 401k, quickly spending all $40,000 in savings. And when that was gone, they began living off their credit cards.

Let's be clear: This barrier is not from a lack of intelligence, but from a lack of know-how. "I'm smart, but I don't know how to perform brain surgery," Ramsey said. Plenty of people out there don't have the financial education they need to make smart financial decisions. The key is figuring out that you're ignorant, then getting help.

Learn about your 401k and investment options. There are plenty of resources out there like Morningstar. Take time to educate yourself.

Tax Time is where alot of people realize how much money they have spent. Set up a spending plan (aka budget)

Credit Card interest rates be aware

Financial Peace is a wonderful thing. Am I there? Some days I think I am. My husband and I have made a choice for me to stay home and he works. We could spend like we are a two income family and say "charge" but we have adopted a no credit card rule in our house. If we can't afford to pay cash, we don't buy it. Does it always work, no but most of the time it does.

If you have checked out Dave Ramsey's books I highly recommend them.
Financial Peace: Restoring Financial Hope to You and Your Family

The Total Money Makeover: A Proven Plan for Financial Fitness

1 comment:

DEBTective said...

You said it, dollface. Dave's plan makes a lot of sense. Thanks for spreading the word and dishing out the feelgoods. You're doin' a great job with living on a budget and connecting with your cash. Keep goin', baby!