Tuesday, January 29, 2008

Stage Pink--How Did We Get Here? Part 1

One aspect of not being in the best place financially that is important to address--but is usually ignored--is why did we get into the situation in the first place? What is the root of the problem?

Think about it. You didn't wake up one day and suddenly make loads of financial decisions and then realize the next day that you messed up. It's a gradual process. Knowing where we are at with our money is more than just knowing how much you make, but it's also about knowing how you interact with it and why you do.

To me, many savings and get out of debt programs are like perfume. They give you all these ideas and tools, but mask the underlying problem. Everything smells just fine on the surface but all the same problems are still there. Figuring out the why behind what you spend will greatly increase your chances of long-term success because you'll be able to stop...or at least have an easier time.

Actually, a better comparison might be weight. Eating too much is like spending too much. Being inactive is like never saving. And just like money, it's usually not really about the food, it's about how it makes us feel. I know that every now and then I need a good strong dose of "Retail Therapy"! But just like a food binge, all the happiness goes away when I see how little I managed to save over the month.

Money is an emotional topic. Not because we get all choked up about the pretty shinny quarters and the neat little water mark on the $20. It's an emotional topic because of what it represents and what it can get us and fear over where the lack of it could land us.

Fessing up to the issues that give us the urge to splurge can be scary, but dealing with them is the only way to figure out why you are in the situation and the only way to figure out how to get out of it. If you are always trying to pay off a purchase you made a long time ago and probably hardly remember anymore, or if you are always spending everything you make, how are you going to reach your goals for the future? And if you want to reach those goals, what's getting in your way?

Knowing the reasons why we overspend or under-save will help us define our goals in Stage Blue by letting us know why we treat money in a certain way. Once we figure that out, we will have a much easier time deciding what our true values are and how to reach goals and make choices aligned with those values.

Money (or a lack of it) doesn't determine who you are! Money is just a tool to get stuff. And at the end of the day, stuff is just stuff. Through out this blog, I am going to keep going back to that point--Money is a Tool To Get What You Want. And we are going to work on using to get what we really want.

When we start dealing with Phase Blue, we will talk more about figuring out what it is that you want. Once you know what you want, you wont feel like you need the high you get from purchasing things, and you'll find it easier to stop buying items you don't really need, but for now, over the next couple of days, each time you buy something, ask yourself why you bought it. Do you really need it? If not, what does it represent? Do you need that latte or do you like the tactile feel of the cup in your hand and the joy of ordering that "Triple Venti Vanilla NonFat Sugar-Free Latte" (my personal favorite).

There's nothing wrong with the occasional splurge, of course, and that's not what I'm saying. Treating ourselves can be very nice every now and then. We just have to limit it. Impulsive is different from Compulsive. If you buy something impulsively you get it because you want it--and this is much easier to stop. If you buy it compulsively you get it because you can't help yourself. Which type are you? Think about what makes you buy impulsively and compulsively.

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