Financial Willpower

How to Improve Your Financial Willpower

December 1, 2010
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By RAMIT SETHI  NYT

November 30, 2010, 12:03 pm

Ramit Sethi runs the Web site I Will Teach You to Be Rich.

One of my friends has been meaning to fax his health insurance company to stop an overcharge worth hundreds of dollars each month. When I asked him why it’s taking so long to fix it, he gave me an astonishing reason: He said he didn’t have a fax machine.

It’d be easy to point and laugh at him for being lazy. But he’s a successful entrepreneur. So why does he find it so hard to motivate himself?

Many of us think we make rational financial decisions. We believe we’re in control. “If I just try harder,” we say, “I could save $100 more each month.”

Yet time and time again, our willpower fails us, and we yo-yo back to our same spending patterns.

So here’s how to turn a few powerful psychological principles in your favor and save more, pay off debt and live a richer life. To read the complete article, please click here.

What is compulsive shopping and spending

October 22, 2010
By

People who “shop ’till they drop” and run their credit cards up to the limit often have a shopping addiction. They believe that if they shop they will feel better. Compulsive shopping and spending generally makes a person feel worse. It is similar to other addictive behaviors and has some of the same characteristics as problem drinking (alcoholism), gambling and overeating addictions.

Americans worried about debt, but feel it’s unavoidable

July 10, 2009
By

When you go out to dinner with four of your friends, it’s likely that at least two in your group of five are worried about debt, according to Bankrate.com 2008 Financial Literacy Series. Sixty-one percent of Americans have some type of debt, excluding mortgages. The type most frequently cited (by 45 percent of those surveyed) is credit card debt.

When it comes to attitudes about debt and saving money, Americans seem to exhibit a split personality. Ninety-one percent say they believe that debt can be controlled by disciplined saving and spending—yet 72 percent also say that they believe debt is just part of modern life and difficult to avoid.

Surprisingly, only 10 percent of Americans who carry debt say they are “really worried” about the amount and aren’t sure how they’re going to pay it back. The bottom line is that about 25 million working-class households have to deal with unmanageable debt. Experts warn that with the current economic crunch, people should be taking a good, hard look at what they owe and coming up with a plan for whittling it down.

Are you losing track of your spending?

April 30, 2009
By

If you can’t account for every dollar you spend, take solace in knowing you’re not the only one. Nearly half of all Americans say they lose track of about $2,340 per year, according to a study by Visa, Inc. The money simply “disappears,” and they’re not really sure where it’s gone, the study’s authors say.

Nearly half of Americans report spending about $120 in cash per week—and losing track of $45 of it. Men under 35 are the biggest “mystery spenders,” reporting that they lose track of $3,078 per year, or an average of $59 per week—mostly during a night out. Women fared a little better, reporting losing track of $2,709 per year, or $52 a week—mostly while out shopping.

It’s not surprising that consumers would lose track of some cash spending, but the Visa spokespeople were taken aback at how much. They said the lesson to remember is that a dollar here, a dollar there adds up. Seven percent of the survey participants reported losing track of up to $100 per week. Of those who reported their “mystery spending” was out of control, 59 percent said using their debit cards rather than cash helps them keep track of their money.

The nationwide survey of 2,036 U.S. adults found that 48 percent of Americans suffer from this “mystery spending.” Here’s a breakdown of when the money usually “disappears”:

• 58% while on a night on the town

• 55% while grocery shopping

• 50% while out with the kids

• 40% while shopping during a sale

• 33% while shopping with friends


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People who don't take risks generally make about two big mistakes a year. People who do take risks generally make about two big mistakes a year.
Peter Drucker

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