Saturday, May 13, 2006

Using Mind Games To Stop The Cycle Of Debt

Military personnel, professionals with degrees in early childhood development and psychologists all know that you act upon what you believe. Your mind is very powerful. If you tell someone from early on they are stupid, in most cases they behave in that manner. If someone is told they are a failure, they will not even try to succeed. What happens when your mind and your actions are in complete synch? What if you used little clever mind games to get yourself out of debt? What if you did this everyday? Would you stop the cycle of debt and enter the realm of wealth?

Playing Mind Games With Credit
If you looked at your spending habits in a different way, do you think it would effect it in any specific way? The way you approach a purchase can have an impact on whether you create more debt or you choose to refrain from spending. For example, you see a suit that you love. It's on the pricey side, but it's your favorite color, style and it's on sale for $200.00. You quickly remember that you have been paying your card faithfully and you have just enough credit available to CHARGE the suit (including the tax) . Unfortunately, the purchase will bring you back to square one-your card will be maxed out again. How can you think of this differently? Let's say you make $20.00 an hour. That means that it would take you more than ten hours of your work week to pay for that suit. (Let's also say you are not satisfied or content with your current employment.) Do you really want to dedicate over ten hours of your work week at THAT job to pay for this suit? After thinking of it in this fashion, most people would walk away.

Another way of looking at the situation is thinking about what you are trading for this suit. You may not be able to go away for a much needed getaway with some friends because of this purchase. You may be getting into deep water with your spouse. Is it really worth the argument? What if an emergency arises? What then?

Think creatively. Do you really want that suit? Would you be willing to work extra hours for it? Would you sell something you don't need on ebay to make up the money? If you think it's too much trouble to go through all of that....then you really don't need to purchase the suit. Walk away.

Playing Mind Games With Cash
One of my favorite personal finance bloggers NCN tried this next trick. Cash only. You can't carry credit cards, debit cards or checks. You assign yourself a budget for each category and you make every effort to stick to it. Some people use an envelope system to disperse the cash into separate categories. If you use the money before you replenish it, then you don't buy anything else for that category. For some it works, they are wise with their budgeting. For others, they just take money out of the next envelope and keep going until it's all gone.

My cousin used a cool cash game to curb his spending. When he cashed his check he asked for large bills. He hated breaking large bills. In this manner, he would always hesitate and think, "Do I really want this? or "Do I really need this?". Who wants to break a $100.00 bill for a $1.08 purchase? When he got to the end of the week, he would save the money he didn't use and start all over again.

There is another variation of the cash game where you have a specific amount of each denomination. For example all your money is in $20.00's or $10.00's. Let me explain. My coworker always cashed her husband's check and asked for $300.00 in ten dollar bills. She explained that her husband would take a ten for every day of the month ( he usually had money left over for the months with 31 days)! He was very structured and disciplined being a reservist and a corrections officer. He would try to contain his daily expenses to $10.00 a day or less. That meant he would try to use no more than ten dollars a day in gas, food, etc. (I don;t know if this would work today with the gas prices). Whatever he had left at the end of the month, he banked!

Using Mind Games to Tame the Flesh
The power of suggestion is a strong marketing tool. Don't think so? Ever notice how many people in a movie theater get up during the first few candy, soda and popcorn commercials? With little jingles that attach themselves to our minds we are being conditioned to want to buy this or that because it will help us achieve a feeling, an emotion or a better status. Just think of Nike's slogan: "Just Do IT." We shouldn't wonder why America is in debt. We live in a constant advertising frenzy that wants us to believe this product will make us thinner, more attractive, more popular and more successful. Having that new car may bring us the right mate, living in the bigger house will make our lives more pleasurable and so on. We need to use our minds to practice abstinence from the material world. The compulsion to spend, buy and waste our resources must be curbed.

What is the solution?
1. Examine yourself and work out your emotions. What is it that the new purchase incites in you? Is it a feeling of success? Is it an andrenaline kick?
2. Learn to live with less and stop making purchases. Look at what your need is. Why do you buy all the exercise equipment? Why do you buy all those shoes that you don't wear? Why do you feel the need to trade in your car every few months? Deal with the real issue and stop using shopping as a bandaid.
3. Make the decision to purge all the unnecessary material possessions from your space. Your space includes your work space, your home and your car (for some of you that also includes your RV's, boats and vacation homes). Get started ASAP, you have a lot of work ahead. Donate, sell and give others your excess.
4. Identify the triggers of your over spending. Do you always meet your friends at the mall? Is every celebration followed by a shopping trip, the bar or another place to shop? Find new forms of recreation that don't involve spending. Bike riding, hiking, and skating all involve good forms of exercise and no expenses. Retrain your mind to reward yourself in different ways for your achievements. If you rewarded yourself in the past by buying things like jewelry, suits, and cologne/perfume use different rewards. Bake a cake, visit a park or go to a museum, find something that you like to do that is free or very inexpensive.

Retraining your mind is something that will take time. Old habits are hard to break. You will fail in the beginning, but be encouraged. Everyone falls at some point. Just get up, dust yourself off and keep on going...


irs form 2290 said...

Stopping the cycle of debt means to manage their finances wisely without neglecting any obligations -taxes and bank debts- and setting aside a part of your income as savings.

Maciek said...

Well said, Stopping the cycle to this debt is important for people stuggling with credit issues. Good advice for wanting to get out of debt.