Behaviors Archives - MoneyWatch101

Is Shopping Americas Biggest Addiction?

The biggest threat to anyone’s retirement is the amount of consumption happening in the daily lives of all Americans. We spend almost 90 % of discretionary income buying an immense amount of stuff we probably could live without. Is shopping Americas Biggest addiction, I believe it is and the numbers behind it easily back this up. If we look beyond the needs of the average person it goes to show that living the American dream is definitely misguided in todays society.

Overall consumption is basically hurting the planet, robbing our future, making people addicted to a so called shopping thrill, and setting up the next generation for an epic failure in the future. In contrast the government loves to report the increases in GDP which is fueled in part by our shopping and spending behaviors. The Gross Domestic Product figure in 2018 will probably be at an all time record high of 20 trillion dollars. IF I’m not mistaken that figure has doubled in the last 10 years since 2008. It is projected to reach 24 trillion by 2021. What does this say about where we are spending the good old Benjamin’s?

I have a shopping mall about 10 minutes away from me and on any given Sunday it is full by 10 am. The parking lots are overcrowded with cars by people aimlessly shopping inside the mall for unnecessary things. Its hard to fathom that everyone who is in attendance at the mall on the weekends is in search for a need. NO they are searching for wants and the list of wants gets bigger every year to coincide with the GDP growth.

Is Shopping Americas Biggest Addiction?

Gambling in the United States is a severe problem and only getting worse as in 2016 the amount of legalized gambling was 116 billion dollars as reported. Just imagine the amount of illegal gambling added to the amount above. Now contrast this with the amount people spend shopping 10 trillion dollars. Granted a vice like gambling compared to the amount spent on consumption is not a fair comparison due to the fact that not everyone gambles but everyone consumes something. Putting aside the total consumption figure and seeing the effects of hyper buying, low savings rates (5%) and the lack of recognition that an overspending problem exists is a red light on our American way of life. This is why I believe spending addiction is greater than gambling addiction. We are rolling the dice in the next few decades and things need to change for the positive.

The fact of the matter is that this spending trend cannot be sustained any longer and the first step is to admit that a majority of people have a spending addiction. If you make 50K a year, spend most of it on housing, transportation, and taxes. The last small percentages go to debt, food, and vices. The trick is that we must reverse padding the companies pockets and instead increase the personal savings rate to 15% at a minimum, once the debt is managed or eliminated.

The real cure is finding what is causing the overspending, which will help to heal the unhappiness occurring either at work or home. Once you can trace it to the root of the problem then you can come out feeling more confident with finances. When you feel the urge to shop or spend unwisely begin to do your most enjoyable hobby. For example you can read a book, walk, watch a movie, go to visit family. Join me in sharing and participating in a new challenge #Save>spend. Savings is always greater than spending.

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Rich Uncle EL

The 3 Rules of Money Management

Stop Spending 100% Income

Do you know a high number of people spend over a 100% of income. They do not have margin in life. They continue to spend on unnecessary things. They continue to spend in order to find happiness. It is the 1 number rule in the area of money management. Hey stop the crying and stop the spending in order to find surplus funds. The choice to funnel 20% of pay from the very first paycheck will allow you the margin you need to not abuse personal finance. Obviously if in Debt you might not be able to funnel 20%, and thus should be directed towards debt.

Avoid Paying Interest for Debt as it’s a black hole

Paying interest on money you don’t own is the ultimate trap. Pretending to be OK financially, while borrowing on debt to fund a lifestyle is never good. Be creative to find ways to pay it back or to avoid it at all costs. Debt is never the answer and those who tell you it is, are stuck in debt themselves. They want company and you should immediately stop listening to that advice. I’ve been in and out of debt and I’ll be honest being in debt is stressful, and those times when out of debt felt great. Avoid giving free money away and tell the banks to keep their expensive loans.

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In Life There are no Shortcuts

In life there are no short cuts and you have to understand this in order to pursue the life you want. What drives you in life? IS it to travel the world? IS it to have luxurious things? OR maybe it is to attain a business one day. Whatever it may be, it takes sacrifice and dedication to achieve all of those probable dreams. You cannot reach the finish line in 1^st place without first putting in the work. Same applies to life; you can’t expect a free retirement without saving for it. Just like you can’t magically whip up a brand new Lexus without thinking how you will be able to afford it. That’s why I want to stress in life there are no shortcuts. Unless you just want to get by doling the minimum.

In life everything has a cost associated to it whether an action or non-action is taken. The fancy car that might bring you joy today will probably set you back 14 thousand dollars a year for 5 years. (70,000+ dollars less for retirement all due to a luxurious transportation choice) Because of this 1 choice you now have to work for 4 extra years and in the process delaying the trip around the world you desired to take.

Now I’m not knocking car purchases, but it is a simple example to illustrate why you must not take short cuts and realize the choices you make have consequences. I bet you can find examples of those choices in life which will set you back or push you forward every day. Like for example the daily $10 dollar lottery habit, that if saved may potentially turn into a 200 thousand dollar portfolio at age 59. What is the cost trade off for mistakes we make? It is a big cost and it will only hurt you in the future.

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How to Stop Financial Pride

Financial pride is a thing and it can be a long stressful life if you can’t take pride out of finances. Nobody wants to be guided with how they manage money, but if that were the case, then all the bad decisions people made financially would’ve never occurred. That gut check you sense when you’re about to make a sizable expense is the exact warning, to help you reconsider such a devastating financial event. If you find it OK to take multiple vacations a year because you think you can afford it, while you continue to live life paycheck to paycheck that’s a perfect example of non positive financial pride. Financial pride (negative meaning) can be a simple mindset to fix, steering you to make unwarranted financial decisions that are not financially optimal. How to stop financial pride is simple and you will see the answer below.

For example I almost purchased a used car for 4 grand just to drive it on the weekends. Rationality went out the door because I wanted a new shiny toy, but after thinking it through, I decided I needed to fix a few projects around the house first. What if we could just take a moment to decide whether a purchase makes sense in our lives? Would everyone avoid spending and live a so called miserable life from those who relate spending and happiness?

Why is it that people who spend a lot, think people who don’t spend a lot, live unfulfilled? The first step to getting around how to stop financial pride is to not believe money & spending equates to happiness. If you’re happy you live happy, and spending 60K on a new Lexus shouldn’t define that happiness. Or maybe by taking 3 vacations per year, you think it can possibly shoot your happiness gauge up a few notches. The experiences coupled with memories should make you feel better for sure, but if it means you just added debt to have fun, then that is counter to happiness.

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Wearing Yeezy Sneakers is not Financially Smart

The hype is real and its been real for the last 3 years.

So where can you make triple the value of money on cost besides the stock market? Practically nowhere and today we have an example of a product that gets used daily by hype beast people. The product I want to discuss is the Adidas Yeezy sneaker. I have to be honest at first I was not a big fan of the shoes as they looked a bit like moon sneakers. But after seeing them for a few years now I can actually say they are not too bad, but I still will never wear a pair. Why must you ask, because I understand the value of a dollar? This is why Wearing Yeezy Sneakers is not Financially Smart.

If you can compound your money to the tune of 3 times the retail value in a matter of a few hours it confuses me to think why not try to sell it and make a killing.

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Knowing Where Your Money Goes in 2017

“Do you know where your children are?” Even if you aren’t old enough to remember this famous TV slogan from the 60’s through the 80’s, the sentiment is easy to understand. It takes awareness to keep track of the important things in your life, and this includes your money. Without careful oversight, money tends to have a life of its own. Some people are slaves to their money, and to their spending habits. Many people fear taking a look at the balance of their checking account, because it might be low, empty, or overdrafted. In order to improve your financial status, you’ll have to keep careful track of your money. Here are three aspects of that process, as well as ways that it will improve your financial life

Keeping careful track of your money puts you in a great position to catch fraud before you are robbed blind. If your money is stolen – from your checking account, from your credit card, from your Paypal account – you can usually get it returned, if you catch it fast enough. If your money is stolen and you do not report it for days or weeks, your chances of getting your account restored are much slimmer. PPI claims history has borne this out. Payment protection insurance is a form of insurance that used to be sold to unwitting loan borrowers. Many of them didn’t notice the problem for months, because they didn’t regularly check their financial accounts for invalid charges. It would have been easier to recover the money, and less would have been taken, had they caught it sooner.

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Finding Peace in a Financially Crazy World

I thought I can switch things up a bit and talk about a topic not many people discuss in this space. Personal finance can and should be about finding peace with your money in any way possible. When it all boils down to it, life is either about having peace or living in stress. I think 99% of people prefer peace. This is why I want to discuss how important it is finding peace in a financially crazy world.

Imagine how people feel living life paycheck to paycheck, do you think they live in peace? How would certain people feel if they did not have emergency savings? What about if people have high interest credit card debt that they can’t ever payoff? How about the new graduates who are burdened by 200 grand in student loan debt? These are all the financial worries that do not foster peace with finances. Lets begin to discuss how to find that peace we so desire.

Meditate once a week – prior to or after tackling a financial acitivity, for example when completing the monthly budget spreadsheet. With the myriad of reasons to stress out over budgets. this 1 mental exercise will relieve any negatives you might encounter. If you can meditate more often, I suggest you do it, and it will offer you the ability to tackle any financial problems you are having.

Get help even if you have to pay for it. Having someone guide you who is an expert in the field of finance and more knowledgeable than you will help you avoid stressful situations with money issues. That guidance is worth more than people think, and all you have to do is find someone that charges by the hour. Doing this will help you avoid spending too much on this financial service. A financial mistake can cost you thousands so why not pay hundreds to avoid them.

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Personal Finance Myths We Need to Ignore

Hello friends it’s the 4th quarter of 2016, and as I get through a tough patch in my life, the blog has suffered without fresh new content. It is hard to find the right balance when you lose a loved one.(Miss you Mom) But I know it’s a part of life and we need to have the strength to move on. Let’s jump back into the topic at hand personal finance myths we need to ignore.

I hear random talks like this all the time and it is unbelievable people still can’t see the big personal finance picture. Why must some of us live with our heads in the sand per say?

If others have done well with money, you can do it to. People of various income levels are doing amazing things, like reaching financial freedom, paying off the mortgage, living a debt free life. These are only a few examples. Let’s not fall victim to the defeatist mentality of some people and please don’t listen to the personal finance myths we need to ignore.

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