Raj Patel writes for DebtGoal.com, a do-it-yourself system for getting out of debt and lowering your interest costs. DebtGoal.com incorporates all of the techniques discussed in this post and can help users understand and get visibility to and manage their debt finances.
Many bloggers on personal finance attack a specific debt issue in an article. But consumers are struggling with debt problems at most twists and turns because reduced and eliminated incomes, ballooning debt at high interest rates, and depleted savings impact every decision in one’s life. Here is some quickfire advice on areas of debt problems, with debt solutions – solid advice for straightening out one’s finances and getting past the initial hurdle of inaction and indecisiveness.
Housing
Debt Problems: Making one’s mortgage payments, deciding when to foreclose or do a short sale, deciding whether or not to rent or buy a home, how to handle housing costs in a budget, and whether to “invest” in real estate.
Debt Solutions: Do not be afraid of a short sale or foreclosure. Depending on your financial situation, this can be the best course of action. Also, do not be afraid to delay purchasing a home. Is it much better to make sure you have income security than to get into an obligation in which you must swing a hefty monthly payment. Set up a budget and look at it honestly: is it feasible to comfortably swing the mortgage payments were you to choose a 15-year mortgage? If not, do not even consider a 30-year option. Finally, the DebtGoal philosophy is clear: treat housing as an expense, not as an investment.
Getting Finances in Order
Debt Problems: How to jumpstart getting organized, setting goals, and tracking information.
Debt Solution: Set up a quick budget in minutes and use it as a hard boundary for spending. Understand the difference between discretionary and non-discretionary expenses. Trim away your monthly discretionary costs, and focus on funding the basic living expenses of food, housing, and transportation. Even with the non-discretionary items, choose the frugal option. Use a no-frills vehicle, grocery shop instead of frequenting restaurants, and rent a room instead of a full apartment.
Raj Patel writes for DebtGoal.com, a do-it-yourself system for getting out of debt and lowering your interest costs. DebtGoal.com incorporates all of the techniques discussed in this post and can help users understand and get visibility to and manage their debt finances.
(please mentally imagine this in your best dramatic E! announcer voice)
Breaking news: NeNe on “Real Housewives of Atlanta” confirms author’s claim that TV watching is bad for your financial health.
We’ve all heard claims that TV watching can influence actions and you may already be tuning out, but give me a chance and wait until the SHOCKING REAL LIFE EXAMPLE at end of this post to hear me out.
Whether it’s video games and violence or, more recently, TV and teenage sexual behavior, there seem to be plenty of studies tying media consumption patterns to real behavior.
With all the press about the recent study about the correlation between TV viewing and sexual activity of teenagers, I started thinking back to an interesting book I read by Juliet Schor, a professor of Sociology at Boston College. In the Overspent American, Schor recaps a study she did on the employees of a large telecommunications company to correlate their spending / debt habits to various behaviors and beliefs, including TV watching.
She concluded that each hour of weekly television viewing correlates to an increase in spending of $200. Why? The “Friends” factor. As we watch TV, we start to identify with the actors and lifestyles of the shows. In a real sense, Ross on Friends becomes not just a TV character, but a lifestyle reference point. If Ross, a paleontologist at a museum can afford a fabulous spacious flat in NYC, certainly we can afford _________________ (fill in the blank yourself with your favorite rationalized expense: the new car, boat, dining out, etc.). Keeping up with the Joneses changes to keeping up with a TV fantasy world, and the more we watch, the more realistic the comparisons seem.
The more TV we watch, the more we spend, and the more debt we rack up.
OK, so now the SHOCKING REAL LIFE example. Reported on E! News, NeNe on “Real Housewives of Atlanta” has publicly stated that she was not evicted from her house for failure to pay rent. Hmmm. This from a woman who appears on TV to publicly brag about how much she spends. It doesn’t take a lot of imagination to see that her spending habits probably kept them from buying a house and that it probably got her evicted despite her claims to the contrary. MC Hammer, anyone?
How can you avoid this consumption trap? In her book, Juliet offers 9 suggestions that I’ve lifted a summary you can find here:
CONTROLLING DESIRE: Become conscious of the tricks that cause you to spend irrationally and overcome those tendencies.
MAKE EXCLUSIVITY UNCOOL: Attatch new and unflattering symbols to consumerism.
VOLUNTARILY RESTRAIN COMPETITIVE SPENDING: Dollar limits on Christmas presents, etc.
SHARING: Communal ownership of certain items like lawnmowers, gardening equipment, childrens toys, etc. Schor recommends setting up lending institutions on the model of public libraries.
BECOME AN EDUCATED CONSUMER: Know the real cost of what you’re buying. Make rational purchasing decisions.
AVOID “RETAIL THERAPY:” Don’t spend money to reward yourself or make yourself feel better.
DECOMMERCIALIZE THE RITUALS: Ten thousand dollars for a wedding? Are you insane!?
MAKING TIME: Is time spent working to make money to buy a meal equivalent to time spent cooking yourself a meal? Analyze those trade-offs and consider doing things for yourself.
THE NEED FOR COORDINATED INTERVENTION: Schor recommends taxes on luxury and name-brand items to discourage us from buying them.
Here’s an interesting video from Juliet Schor:
Let us know your thoughts. Does TV consumption influence how you spend? Are you sure? How about your friends?
Scott Crawford is CEO of DebtGoal.com, a do-it-yourself system for lowering your interest costs and getting out of debt. DebtGoal.com incorporates all of the techniques discussed in this post and can help users understand and get visibility to and manage their debt finances.
