ICFE eNEWS #11-18 - April 7th 2011
Seven Habits of Highly Unsuccessful Spenders
by Ted McLyman
After working with people and money for years, this is what I've
learned: Money makes us crazy! "I have too many choices. I am
inundated with too much information. And life is moving at warp speed."
What becomes apparent are the habits od these unsuccessful spenders.
- I can do it, just watch me. We are overconfident that we can
control our spending. We think we can control our behavior--this time. We
accept the teaser credit card application because we think we won't use
it. We buy "six-months-same-as-cash" because we know we'll have
everything paid off in time. Bad things--life--only happens to the other
- I know I'm right and I can prove it. We rationalize and confirm
our spending decisions. No one likes to be wrong and losses/failure
emotionally hurt--a lot. We ask "experts" we agree with to confirm our
spending choices. We discount anyone who disagrees with us. Over time,
we can rationalize just about any spending decision.
- I'm smart. We think the skills and abilities that have made us
successful in one area will carry over to our spending decisions. I know
a number of very smart and successful professionals who thought they
could run a restaurant. They could not--regardless of how good their
mom's pizza recipe. We tend to confuse luck with being smart. Admit it,
some of our buying choices worked because we were at the right place at
the right time. Brains had nothing to do with it.
- This time is different. We want to believe that a bad spending
choice in the past won't happen again. It can and it may. We aren't very
good with figuring out risk and probability. If we were everyone would
own life insurance and not more than 10% of their company's stock.
Remember, the group can be wrong--dot coms, housing, and so forth.
- It's an investment. We as individuals have no control over the
market price or rate of return of anything. We can ask a price for our
Beanie Babies, gold plated coins, and collector's edition presidential
plates but the market will determine what it is worth. Just because the
guy on television says it's a great investment does not make it so.
- I have enough time to get my spending under control. We never
have as much time as we think. Compounding is our friend--if we use it.
We seldom get a "do over" with our money.
- I don't have enough money. If we are really honest with
ourselves, we have money. We simply don't like to make the hard choices
about our spending choices. Instant gratification is great. Our feeling
brain loves it. However, have to choose between the car that cost more
than my first house and being able to retire in the future.
Ted McLyman is a fully licensed financial advisor and author. He is a
retired Lt. Col, USMC where he served in various command and staff
positions to include: economics instructor, U.S Naval Academy; Aide to
the Assistant Secretary of the Navy for Financial Management; and served
a tour in Southwest Asia during Operation Desert Storm.
ICFE eNEWS is available FREE upon request by visiting our
Web site and filling out the
contact form, with the words "eNews
request" included in the comments field. Please pass this eNEWS on to your peers
and interested others and invite them to subscribe for free.
President - Executive Director
Institute of Consumer Financial Education (ICFE)
ICFE - Institute of Consumer Financial Education -