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Her Story

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Her Story
By Dwight Harshaw, BBA, Personal Finance Counselor

Dwight Harshaw, BBA

Dwight Harshaw, BBA

Recently, a story came to light in my hometown about a 27 year old woman who was cited for a misdemeanor sex charge. She was caught by an undercover detective in a sting operation targeting escort services. It was her first night on the job. How did she get there? She said she lost a second job, she was going through a bankruptcy, and her wages were being garnished. Her financial problems overwhelmed her and drove her to making an unfortunate decision, which destroyed her young career. I don’t know her and this is not a condemnation. I have great empathy for her. I am captivated by her story because-before she resigned-she was a high school algebra teacher, with a master’s degree, in her fifth year of service. What happened?

I don’t know any more than what has been publicized but in looking and speculating about her situation through a personal finance lens, I think she may have found herself in the circumstance that a lot of young people and people in general are in; they are besieged with debt. The average college graduate is nearly $20,000 in debt. (Source: Demos.org, “The Economic State of Young America,” May 2008) Many have fallen prey to the constant stream of messages (advertising) that are designed to persuade people to value things (depreciating assets, junk) more than money (financial security). Once young graduates get their credentials and jobs, they want the material accoutrements that they believe they should have. On top of school loans and credit card debt, they pile on more debt. And then, there are the ordinary living expenses of life to contend with. Before they know it, they find themselves in unsustainable financial predicaments. More attention needs to be given to the importance of wealth building, especially at the start of a career.

 

Stylish Woman Dancing with Martini in Hand

 

Wealth Building

Wealth building is simply being knowledgeable about money and making it work for you more than it works for others. To become a wealth builder, there are 4 things you should do. You should steer clear of new debt, establish an emergency fund, pay off your student loan debt early-if you have any, and save for your long term future.

 

Avoid Debt

The young lady is bankrupt and suffering wage garnishment. When credit is so easy to obtain, it is hard to be responsible. We use it to buy non-financial things that give us temporary pleasure. We buy expensive wardrobes of which the styles come and go; we buy new cars which lose value as soon as the deal is done; and we purchase things that we simply don’t need, but the debt on those things goes on, long after the usefulness and excitement is over. Credit should be used responsibly-never! Okay rarely. Debt avoidance is a virtue.

 

Emergency Fund

If she had an emergency fund, she might not have been faced with a decision that put her career in jeopardy. An emergency fund is a fund dedicated specifically for extraordinary immediate crisis needs; it smoothes out a rough financial time. Car repairs, job lost, medical bills, household maintenance problems or things that cannot be paid for with out-of-pocket cash qualify as emergencies. It should be a priority to fund it with at least 1 to 2 thousand dollars initially and with 3 to 6 months of your take home pay ultimately.

 

Pay off student loan debt

Some are fortunate to not have student loan debt when college life is over. If that is not your fate, I have this advice; pay your loans off as soon as possible. Double your payments or add an extra amount to reduce the total interest and time that you will pay on your loan(s). Be sure to follow the protocol of the lender for early payoff. The sooner you pay off your student loan debt, the sooner you can get on with building wealth.

 

Retirement

The money you save early on in your career will be the most valuable when you retire. The elements of time, dollar cost averaging, and compounding are a wealth builder’s best friend. Save to the maximum level in tax advantaged retirement plans offered by your employer. If nothing is offered or you can afford to save more, establish a traditional or Roth IRA and fund it to the max or with as much as you can. Ultimately you want to save at least 15% of your annual income for the future because the burden of providing for your retirement is on your shoulders. The money you save early will be worth more and be more useful in the years to come than the value of any consumer item you may buy today.

Her story is all of our stories. All of us have made unwise financial decisions. On a positive note she is young, smart, and hopefully ambitious. She will recover over time and this will all be a distant memory. Time heals. When you find yourself off track financially, get back on. To be a wealth builder, remember this; it is wise to pay with cash rather than with credit, have money set aside for a crisis, pay your debt off early, and save for your long term future.

 

About Dwight Harshaw: Dwight Harshaw is a personal finance counselor, realtor and writer. He has a BBA from the University of Arkansas at Little Rock in Finance with an emphasis on financial planning.

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Copyright © 2016 CWR Media – All Rights Reserved

Can You Live Without It?

Guest Contributor Lionel Shipman

Lionel Shipman Owner - Shipman Consulting

Lionel Shipman is the owner of Shipman Consulting, a personal and business finance-consulting firm specializing in helping individuals and businesses improve their financial outlooks. The primary focus of the firm is facilitating seminars and classes to educate, motivate, and empower people to take charge of their financial lives. The firm also offers one-on-one consulting services.

Please visit the firm’s website for information at  WWW.ShipmanConsulting.Com.

Email address: Contact@ShipmanConsulting.Com ; Twitter: @LShipmanSC

 

Know Your Money
Monday – November 14, 2016
(First  published September 17, 2014)

Can You Live Without It?
By Guest Contributor – Lionel Shipman

 

Can you recall some old love songs that included the words “I can’t live without you”?  The song talked about living everyday with that special person and the consequences of living without them.  Well, you can live without that special person, even though you may not want to.  It may be a huge adjustment but you can do it.

Can you recall a day when you were walking in your favorite department store desiring a certain pair of shoes?  As you casually decided to try on the shoes and take a stroll in them, you noticed that the shoes felt wonderful to your feet and the price was not bad. With the biggest smile, you looked at everyone around you as well as the sales attendant and said “I’ve got to have these shoes.  I cannot live without them”.

Well, that is the mentality that many people have regarding their spending.  It is the “I cannot live without it” mentality. Instead of people working toward getting their financial houses in order, they are casually spending on things they cannot afford or even need.  If there has ever been a time to spend carefully and manage your money, the time is now. 

I am not trying to promote fear; rather, I am aiming to instill sound financial judgment into the hearts and minds of people, especially when it comes to spending.  It reminds me of the biblical parable regarding the man who built his house on sand as opposed to rock.  When the storms came, the house built on sand crumbled and washed away; whereas, the man who used rock as the foundation, his house withstood the effects of the storm and remained intact. Well, many consumers’ financial outlooks are not only crumbling but are being washed away because of the “I can’t live without it” mentality.

Can't Live Without It!!!

Can’t Live Without It!!!

Check this out. Without using any names, I recall a couple of years ago a person discussing with me that paying off debt was going to be their main goal for the year. However, every month this person was spending and making unnecessary purchases such as dining at expensive restaurants and buying sporting gear, at the same time trying to justify their spending spree. This person’s actions implied that they just could not live without it.  Who cared that the charges were paid by credit card and were not paid off by the end of the month the charges were made?

Here is another example. My wife and I met a couple that ventured on a cruise vacation even though their home mortgage was in the beginning stages of foreclosure.  Granted, I believe taking a vacation is important.  However, when the mortgage or rent payment is due, a vacation can be postpone to a later date or one can consider taking a modified vacation by placing a beach towel on the floor, getting some snacks and a mixed drink, and enjoying a television marathon of vacation hotspots on the Travel Channel.  I know that sounds humorous.  But, what is the alternative?  Keep spending because you deserve it (new shoes, clothes, car, expensive vacation, etc.)?  Keep spending because everyone else is doing it?  Keep spending because it makes you feel good?  Keep spending because you have worked hard all year long?  Can you live without it?  Yes, you can live without it.

During my personal financial seminars, I always stress that everyone should enjoy life to the fullest.   However, we must control our spending and remove the “I can’t live without it” mentality.  Regardless of the discounts, rebates and percent-off offers, we (consumers) should not allow the “it” to control how we allocate and spend money.  Consumers should remind themselves that the “it” will no doubt be there when they are in a better financial position to afford it.  Don’t worry, the great sale in the department store will most likely happen again.

The “I can’t live without it” mentality reminds me of the cliché “keeping up with the Jones’.  When a neighbor or friend decides to purchase a new house or car, why do we feel pressured or obligated to do the same or better?  Why do we strive to live like our favorite entertainer or sports figure, knowing that our incomes are nowhere near theirs?

If consumers continue spending carelessly and allow the “I can’t live without it” mentality to lead their financial lives, they will be placed in a position where they will have no choice but to live without it.

© Copyright CWR Media, 2016.   All rights reserved.

Can You Live Without It?

          Guest Contributor Lionel Shipman

Lionel Shipman Owner - Shipman Consulting

Lionel Shipman is the owner of Shipman Consulting, a personal and business finance-consulting firm specializing in helping individuals and businesses improve their financial outlooks. The primary focus of the firm is facilitating seminars and classes to educate, motivate, and empower people to take charge of their financial lives. The firm also offers one-on-one consulting services.

Please visit the firm’s website for information at  WWW.ShipmanConsulting.Com.

Email address: Contact@ShipmanConsulting.Com ; Twitter: @LShipmanSC

 

Know Your Money
Wednesday – September 17, 2014
Can You Live Without It?
By Guest Contributor – Lionel Shipman

 

Can you recall some old love songs that included the words “I can’t live without you”?  The song talked about living everyday with that special person and the consequences of living without them.  Well, you can live without that special person, even though you may not want to.  It may be a huge adjustment but you can do it.

Can you recall a day when you were walking in your favorite department store desiring a certain pair of shoes?  As you casually decided to try on the shoes and take a stroll in them, you noticed that the shoes felt wonderful to your feet and the price was not bad. With the biggest smile, you looked at everyone around you as well as the sales attendant and said “I’ve got to have these shoes.  I cannot live without them”.

Well, that is the mentality that many people have regarding their spending.  It is the “I cannot live without it” mentality. Instead of people working toward getting their financial houses in order, they are casually spending on things they cannot afford or even need.  If there has ever been a time to spend carefully and manage your money, the time is now. 

I am not trying to promote fear; rather, I am aiming to instill sound financial judgment into the hearts and minds of people, especially when it comes to spending.  It reminds me of the biblical parable regarding the man who built his house on sand as opposed to rock.  When the storms came, the house built on sand crumbled and washed away; whereas, the man who used rock as the foundation, his house withstood the effects of the storm and remained in tact. Well, many consumers’ financial outlooks are not only crumbling but are being washed away because of the “I can’t live without it” mentality.

 

Can't Live Without It!!!

Can’t Live Without It!!!

 

Check this out. Without using any names, I recall a couple of years ago a person discussing with me that paying off debt was going to be their main goal for the year. However, every month this person was spending and making unnecessary purchases such as dining at expensive restaurants and buying sporting gear, at the same time trying to justify their spending spree. This person’s actions implied that they just could not live without it.  Who cared that the charges were paid by credit card and were not paid off by the end of the month the charges were made?

Here is another example. My wife and I met a couple that ventured on a cruise vacation even though their home mortgage was in the beginning stages of foreclosure.  Granted, I believe taking a vacation is important.  However, when the mortgage or rent payment is due, a vacation can be postpone to a later date or one can consider taking a modified vacation by placing a beach towel on the floor, getting some snacks and a mixed drink, and enjoying a television marathon of vacation hotspots on the Travel Channel.  I know that sounds humorous.  But, what is the alternative?  Keep spending because you deserve it (new shoes, clothes, car, expensive vacation, etc.)?  Keep spending because everyone else is doing it?  Keep spending because it makes you feel good?  Keep spending because you have worked hard all year long?  Can you live without it?  Yes, you can live without it.

During my personal financial seminars, I always stress that everyone should enjoy life to the fullest.   However, we must control our spending and remove the “I can’t live without it” mentality.  Regardless of the discounts, rebates and percent-off offers, we (consumers) should not allow the “it” to control how we allocate and spend money.  Consumers should remind themselves that the “it” will no doubt be there when they are in a better financial position to afford it.  Don’t worry, the great sale in the department store will most likely happen again.

The “I can’t live without it” mentality reminds me of the cliché “keeping up with the Jones’.  When a neighbor or friend decides to purchase a new house or car, why do we feel pressured or obligated to do the same or better?  Why do we strive to live like our favorite entertainer or sports figure, knowing that our incomes are nowhere near theirs?

If consumers continue spending carelessly and allow the “I can’t live without it” mentality to lead their financial lives, they will be placed in a position where they will have no choice but to live without it.

 

© Copyright CWR Media, 2014.   All rights reserved.