I wonder if that’s because we are getting smarter or just debt poor. With credit card companies actively reducing credit limits on a growing number of bad risk customers who can tell?
In the ‘good old days’ (between the Greenspan almost free money era and the Pre Mortgage meltdown period) the choice to spend or save hardly created a ripple in the psyche of consumers.
With the hedonic treadmill slowing this is your big chance to spend less. As luck would have it, if you’re debt plagued and equity poor you have a great opportunity (albeit forced) to step off the credit-debt-stress cycle.
For some this is a conflict of epic proportions. Wanting it all and wanting it now was the motivating force behind your spending. To give that up voluntarily wasn’t easy as the $970 billion in revolving loans such as credit card debt indicates.
But now you have hope.
It’s a real possibility that no one will lend you any money at rates even you die-hard pleasure seekers consider worth the immediate gratification of what you want to buy given future prospects. More troubling is being unable to borrow for what will make a long term contribution to your happiness.
While praise for Wall Street for their gift and cries of “thank you, thank you” will be underwhelming the time is surely now to get your spending in line with your income.
It’s not going to be painless, however, when you are truly desperate for money for emergency needs and life’s necessities. All the more reason to manage what you have prudently and begin to anticipate what appears to be a rough period ahead when a budget surplus will trump everything.
Continue to cut wherever you can and get serious about what really matters most. But never make across the board cuts (like any fixed percentage) to all your spending. That foolish practice eliminates the few contributors to the lasting gratification that makes life bearable in emotionally stressful times.
Copyright 2008 William M. MacKay
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( 2.9 / 145 )Does money thrown into a black hole of cosmic proportions disappear forever? Or does it reappear some time later in a new form you can either enjoy or spend again? (A taxpayer dividend perhaps?)
While the comparison to a government bail-out of the financial industry is intentional, the thrust is more directed to the current state of your balance sheet.
The gravitational pull of wanting more and the quirky elements behaviorists are revealing about our human desires suggest money evaporates as quickly as we get it. It is an epic battle to resist the pull when the black hole is a colorful and sparkling galaxy of millions of products and services.
Like energy which can change form but doesn’t disappear, money returns ideally as satisfaction through your sense of the increased subjective well-being (happiness) that arises from its transformation. In its finest hour spending is truly conservation of energy.
However, the marketplace (spinning with unrestricted capitalism) is an expanding black hole consumers (and lately, government) fall into. The depth of your descent is predicated on the sucking power of your impulsive and compulsive spending, and the vagaries of your ABCP, ARMs, CBOs, CDs, GICs, EFTs, and other alphabetically-rated forms of investing*--a satisfaction-dependent definition*. ‘Cash for trash’ is lost forever.
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Conservation is a word oddly absent from much of today’s dialogue. It’s heresy to be content with just a happy, moral, and ethical lifestyle without the bigger home, new car, swimming pool, and super-sized …. Well, almost everything.
As the winners in this system reveal, the global mantra of growth and ever rising corporate quarterly profits depend on you wanting more than you can afford. The world financial and governance structure is so fragile and dependent on everyone spending and borrowing that we cannot conceive of surviving a global recession, yet alone a depression of any magnitude.
At all cost (…‘yours’), according to the experts, it must be prevented. The best and brightest, however, are known to be ignorant as recent events prove. You join the process at your peril.
More of everything doesn’t guarantee you can find happiness or reverse a lifestyle that creates gross gulping noises. There’s tons of evidence about this if you have the inclination to look. But you have to prove for yourself that wanting less stuff doesn’t make you miserable.
Copyright 2008 William M. MacKay
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( 3 / 157 )I have done careless things without thinking or worrying about the possible bad results. Consider my endorsement of more government intervention to curb this collective practice as atonement.
Nobody wants to be responsible for what’s happening around us. “Pass the buck” takes on new meaning in a lifestyle context. Most of you could have used a government bail-out at some point. Unlike national treasuries, you can’t print money when you need it.
That’s the value of credit cards. We simply ‘swipe’ money from others who expect to be repaid one day. While that’s a legal obligation the lender has the power to enforce we can simply escape the debt by declaring bankruptcy.
And this ‘no shame, no blame’ convention now applies at the highest levels of the banking and financial sector. Now that we all practice ‘magic slate’ accounting what next?
Here’s the brutal truth. You can’t save for a better future if you’re too greedy for all the material stuff. Spending and saving don’t work together when your consumption exceeds your income. You have to make new choices.
How many of you are ready to choose more happiness and fulfillment than you’ve ever had before? I thought so. There is a caveat though…you can have something you want (within reason) but not every thing.
Choose spending to get you toward that ‘something’. It’s a process. But you need a plan because you don’t really have a saving problem. You have a spending problem! It’s not the money; it’s what you do with it. That’s why “SAVING is for Suckers!” until you fix your problem.
The missing link is a plan that smacks you with an awareness of how much money you spend on everything but what gives you the greatest lasting satisfaction and enduring pleasure. It’s often what brings a smile to your face just thinking about it.
Without that ‘something’ in your life, all that you have achieved, acquired and been celebrated for will not compensate for its absence. This is your passion absolute. How cool is that!
To find it, invest in it, and surround yourself with it is very simple. Change your perception of the good life. Take a different road and redirect your spending to a very personalized and intimate priority where valuing your true individuality is what really matters most. It’s not about more stuff.
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( 3 / 196 )When was the last time you went dancing, chilled out with some great music, or enjoyed unscheduled socializing with friends?
Been awhile…then it’s important to identify and explore your time-poverty. It is a contributing cause and effect of your debt, happiness, quality of life and…yes, your consumption habits.
When you’re so busy trying to enhance, maintain or worse, salvage your lifestyle, it can actually be diminished. Working too much—as in 8-10 weeks more annually than most Europeans—is often the culprit. (And why is that?)
Work demands more hours today. No debate there. When employers shed workers so much more is required of so few. But then, there is also that small matter of your spending. You must work longer and run faster to pay your debts and maintain your income than you did last year. Throw in the hunting trips to the mall and those trips to the gas pumps also become much too frequent.
All these activities push you toward convenience for which you pay a premium. Plus... you are spending more today on the basics as inflation erodes your income. And if you are a homeowner or investor watching your asset values decline you respond by working longer and harder to replace your paper losses of wealth.
And yet, for even the successful, happiness is elusive in this culture where our obsession and preoccupation is getting rich. For most folks, this means less time off and fewer, shorter vacations.
All of this leaves you wishing for more; not more money but more down-time, flex-time, and fun time.
Your precious relationships, hobbies, socializing, and community involvement, etc.--the sources of your happiness—get short-changed, perhaps even lost in a time-starved lifestyle. But this can be reversed, sometimes overnight.
Life can be better when you refocus on your dreams and aspirations. It is your passions and progressive realization of your dreams that make you more fully yourself. There is no legacy of regret when you’re investing time ‘on purpose’, on the people and things you can’t put a price on.
And there is a financial dividend, too. How you spend your time impacts how you spend your money. Time spent on what really matters most costs so little. So enjoy. This is the time of your life.
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( 3.1 / 173 )Whether or not the first day of 2008 was the beginning of a recession or not, it should be the end of your focus on what you can't have and can't do. It's time to ignore the negativity and fear mongering. Simply acknowledge the mess greed has incubated and move on.
Here's the first thing to do. It's called the Great Lifestyle Rule of Law. Things that matter most should never be at the mercy of things that matter least. How difficult can that be?
With good intent, most of us would probably say, "Yeah, I do that." Of course, it may not be top of mind every time you're at the mall. That's when our impulsive and frivolous spending takes an unplanned bite out of the budget. But okay, we'll cut back somewhere else, right.
That's not quite how the rule should work. What really matters most and makes an undeniable value-added contribution to your lifestyle right now AND moves you in the direction of your dream and aspirations is different. Here's the catch. It's always what comes after the 'AND' in the above sentence that makes following this rule such a challenge. It has a long term reach as you aim toward the future you want to have.
The focus must be on your dreams and aspirations and what you're doing to make them a reality. Call it goal setting, lifestyle planning or whatever you like. The point is you can't hit a target you can't see even if its only in your imagination. So anything that obscures or clutters up your picture of the target minimizes the chance of reaching it.
We get a lot of help with the clutter from the 50,000 malls we can visit, advertisers, and the media who bombard us constantly with images of what they want us to dream about and acquire. This commercial litter is dangerous to your dreams and your budget. It's also enviromentally unfriendly to a lifestyle you'll want to sustain once you have it.
Here's a suggestion. Make time to add up the dollars you plan to spend this month on your dreams and aspirations ... what really matters most to you. (I call these my passion absolutes.) You may be surprised by how little that is in the big picture of your overall monthly spending.
If that's what you discover then it's time to refocus on the target. Now, the things that matter most will not be at the mercy of things that matter least.
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