Finance Roll

Coffee Chat with Bob

Sipping on a cappuccino from a bowl shaped cup at my usual coffee shop I read the newspaper, updated my schedule on the cell phone, and stirred my coffee amidst a cacophony of giggles. "What now?" I mumbled.

I should have known my friend Susie, who runs her own business fixing up houses prior them going to the market, would be the one giggling and tapping me on the shoulder. In months prior was always on the late side, but the past couple of weeks she'd been meeting me right on time. This meeting proved to be no exception. Looking at my watch in fact, Susie was ten minutes early. I told her that and she chided me, "Now Bob you make things so complicated. But don't feel bad. I was the same way and so are half my clients."

"What are you talking about?"

"It's society. Everyone is doing so much these days. Not only are my clients asking me to fix their homes, but some are asking me to fix their lives. I'm not a miracle worker. What I'm noticing is most folks want to simplify their life like me. They want to get back to basics and prioritize. I mean look at you, you're a perfect example, Mr. Has To Have The Latest Gadget Himself."

I defensively said, "Not so, that's Ronnie. You got us confused."

"Sure Bob. Your friend starts it and you follow. It's the classic keeping up with the Jones which gets you in debt and too stressed."

"But I like keeping current. Besides technological things aren't built for the long haul, most manufacturers expect a year of use and that's it. My purchases make economic sense."

"Bob, I'm not saying to forego buying a computer or the latest cell phone. I just got a new cell phone last week and a new computer a couple of months ago. These were necessary business expenses. My main point is it's time to simplify you life. Take a hard look at your finances and spend time rediscovering yourself. It's about eliminating possessions and social activities you've been attending simply out of a sense of obligation when the enjoyment's long passed. It's also about letting go of tasks which have lost their meaning or purpose."

"Susie, I'm not about to go live in some cabin in the middle of nowhere."

"Bob, for most people it's not about dropping out of society and moving to the woods. It's about regaining control over one's life. In the process you'll discover the activities, people, careers, and activities, which mean something to you. As you get into this new way of being you'll let go of the outer definition of self and rediscover your own individuality."

"Wow, Susie. It sounds you swallowed up some self- help book."

"You know me too well. I'm a big fan of the book, Keeping Your Life Simple by Karen Levine. One of the first places I wanted to change in my life was finances. I knew if I couldn't get my impulsive purchases under control no amount of eliminating clutter in my life and rediscovering the inner me would ever help. This is a good place for you to start too. Now I want you to honestly tell me the last time you made a major purchase and if it was your choice to buy or someone else's?"

"Uh, well. My son needed..."

"I knew it. You can't even remember what he wanted. It's part of the problem. Did Johnny really need whatever he so desperately wanted? Do any of us? I doubt it. I bet peer pressure influenced his desire. Did buying what he needed make you feel good or not?"

"Of course it did. I like providing for my family."

Patting me on the back she said, "I know Bob. You've done a good thing. But the problem is you're being influenced and urged to purchase something all the time more often than you realize. We all are. Every time you visit friends, or your son does, or you read a newspaper, or magazine and compare the ads you're next purchase is just waiting for you around the corner. It's fueled by well thought out marketing plans whose purpose is to get you to buy and buy often. Which you do so well! I know you. It's why you're still working when you'd rather be enjoying your early retirement without worrying about finances."

"Susie, you're making so much sense. My credit bill was huge last month and I hate to admit this, but a lot of it was devoted to impulse buys."

"I know Bob. I did the same thing a few months ago. So many of our purposes are made on emotion, we see something we like at the store and we have to have it. But do you know ends of happening to most impulse purchases? We wind up hating them. Why? Because the purchase was made on a whim. The items we take time to purchase we end up cherishing knowing we've made the right decision for our needs and budget."

"So Miss Simplify Your Life, how's your credit card debt?"

"I'm in good shape. I eliminated shopping store cards. I just carry a Visa, Mastercard and American Express. I spend what I can afford to pay back each month. I had to change my attitude. Credit is so easy to obtain, but the thing is most of us forget credit is just another word for debt.

The key to managing finances is being in control. We often relinquish control when we walk into a store. Why? Because most of us like being pampered. So we walk into a store and think gee isn't it sweet the clerk wants to make sure I'm happy. They're being nice to get you to buy. But you control your money not some clerk luring your towards purchasing some must have item. It's so easy to fall for high powered sales techniques. They can easily overpower good judgment. I know. I still have a couple of times shares."

"But I thought you like your time share in Hawaii."

"I do Bob, but it would be have been just as economical to rent a condominium or stay in a hotel, but I fell for the sales pitch for Hawaii and the timeshare in Aspen. I'm more cautious now and follow my money trail. I've come up with a few rules I use any time I go shopping.

1. Prior to shopping I investigate the market. By the time I'm ready for a purchase I know ahead of time what's a good deal and what's a waist of money.

2. I try to avoid shopping when I'm hungry or short on time. This reduces the number of impulse buys.

3. Know the timing of a deal. This requires research. If you ask questions or read the newspapers it's pretty easy to see what time of year is best for purchasing a particular product or service. Takes cars for instance, the best time to buy them is when the new models come out and dealers want to get rid of inventory. The same thing with appliances and furniture."

4. Stop using a credit card for convenience. When you pay for something in cash it's easier to know right away whether you can afford it or not. For instance, the lunch entree for $10.00 you know you can afford based on the twenty dollar bill in your wallet. The $30 designer t-shirt is another yes, again the cash is in your wallet. The food processor for $300 you can't afford, the cash isn't in your wallet. Sure, it might be an item you can afford based on your monthly income. But, the point is to get in the habit of making purchases with cash based on what you have on hand. When you do this you'll be more careful with your purchases. The money becomes tangible.

"Susie, but what if you want to use your credit card to establish a better credit rating?"

"Just use the credit card with sound judgement and charge only what you can pay back immediately. So many people get into the rut of paying the minimum payment on credit cards. What ends up happening is they are spending their hard earned cash on interest rates and incurring unnecessary debt. What I do is to set aside money each month just to pay my credit cards so it becomes a regular expense just like my mortgage and electricity. Plus, I write down all the credit card purchases each month. This way there are no surprises when the bill arrives."

"Susie this makes so much sense. I'm curious if you end up feeling like you're missing out and pardon my expression by being so hard nosed about your finances."

"No. It's not hard nosed, Bob. It's called being practical. It's all back to control. Ask yourself do you want to live life to enjoy or incur expenses? Of course you choose to enjoy life. We all do. But it's pretty hard to do when credit card debt is out of control.

Anytime I consider making a purchase I ask myself do I control my credit obligations and will I still be in control if I make the purchase? If I'm comfortable with assuming a little more debt I will. Like last week I joined a health club. Before I committed to a health club membership I made a list of all my credit obligations including: my mortgage, the time shares, the credit cards and the monthly payments for each, as well as, regular household bills. After analyzing the expenses I knew I could afford belonging to a health club. It's all about being smart with money."

"Susie, it sounds like you've changed your whole attitude towards finances."

"Yes. Attitude plays a big role in how we view our finances. One way to maintain control of paying interest is considering a credit repair program if you credit score happens to be below 600. Running a free credit report will give you an idea of what your credit score is today. So many people try to demonstrate their wealth by showing off luxury items. What they forget is wealth is what a person accumulates, not what they spend. Most millionaires know this. They often live in middleclass neighborhoods and lead modest lifestyles and spend time looking for ways to make more money. Their success is measured by their net worth not by the number of toys they accumulate."

"Wow! I'm impressed. Now what are your financial goals?"

"I want to be wealthy and live life simply. Some of the ways I'm working towards the financial side of things is by goal setting, saving money, and living within my means."

"Beyond finances what are some other ways to simplify my life?"

"Simplifying your life means learning to enjoy the time you have and making the time yours."

Reaching into her purse Susie handed me a flyer with twelve steps to simplify your life.

1. Let go. Make a list of work and home responsibilities. Put the most important items at the top. Draw a horizontal line through the middle of each list. Try not to do the things below the line.

2. Eliminate clutter. Get rid of those impulse purchases collecting dust in your closet.

3. Stay home and do nothing - Don't do anything planned, scheduled, or productive. It does not matter whether you end up lounging in the backyard, watching a movie, falling asleep reading a novel, or walking in the neighborhood-the point is to enjoy an unscheduled day just to unwind.

4. Try an old fashioned day of fun with the family. Don't turn on the TV or the computer. Play games, listen to music, and enjoy nature. You'd be surprised how much fun you can have without a structured activity or the attention pulling forces of the TV and computer.

5. Get rid of time wasters. Reduce unwanted telephone solicitation. Check your email only as often as necessary and make sure your email program filters out junk mail.

6. Sign up for automatic payment of bills. By arranging for automatic payment you'll no longer have to worry about writing the check on time and putting it in the mailbox. Just make sure to always have enough money to cover the bills!

7. Are you living life for the expenses? Do you need the job to pay for the home, the car, the clothes, the restaurants, the gadgets, after school activities, college education, and vacations? If you feel like you're making money to do all these activities with little time to enjoy them, you're not alone. You don't have to keep up with the proverbial Jones.

8. Make time for relaxation. Whether it's by going to the movies, reading a book, taking a bath, or seeing a concert, you'll be reducing stress. By having a regular time to do the things you enjoy you'll feel better and more energized.

9. Don't go grocery shopping until you eat everything in the house. Create a spontaneous meal with your kitchen's ingredients. Let the imagination run wild.

10. Be thankful. Recognize the goodness in your life.

11. Plant a garden. Spend a few hours each week to watch something grow and see life at nature's pace. Find the awe and wonder watching seedlings sprout and blossom.

12. Express your creativity. Learn something new. Instead of thinking about all of the creative things you've always wanted to do.like painting, playing the guitar, or taking a cooking class - do them.

Reading over Susie's list I felt a blush coming over my face. Susie pounded on the coffee table making a drum roll. I smiled. The two of us had been talking about strumming together some folk songs for years, but had never got around to taking a music lesson. Pretending like I had a guitar in my hand I hit the high and low notes just right. The imagination is never off key! Susie laughed at my efforts then said, "Let's learn the drums first, ok? But one of us has got to learn how to sing in tune."

I nodded. Same old Susie.

Source: A personal handbook for credit management® by Marie Peters, Keeping Your Life Simple by Karen Levine.