Credit Basics
Recession-proof your brain
Saturday, May 17, 2008
No, not a Great Depression, where the U.S. economy is falling apart, but a mental depression, when you feel like your personal economy is falling apart.
The Reuters/University of Michigan index of consumer confidence released Friday shows that consumers haven't felt this bad about their financial prospects and the future of the overall U.S. economy since 1980.
But feelings aren't facts.
And a lot of these bad feelings come from things we do and think that leave us feeling poorer and gloomier about the economy than we should, notes Kathleen Gurney, CEO of Financial Psychology Corp. and is author of "Your Money Personality: What It Is and How You Can Profit from It."
"I see people who make themselves feel poor regardless of how much money they have," says Gurney. "It really depends on how they think and feel about their money." If your Gross Mental Product needs adjusting, try these tips to recession-proof your brain.
Clean it up
You may not be cleaning up in the stock market, so clean up at home and on the road, says Mary Hunt, who runs DebtProofLiving.com and is the author of "Live your Life for Half the Price -- Without Sacrificing the Life You Love."
The same goes for the house. Cut the clutter in your own home and you won't feel like a schlub scraping by in a hovel. You also won't need to worry about that expensive addition if you reclaim the spare bedroom from junk. "It makes us feel deprived because we are deprived of a sense of orderliness and feeling in control," Hunt says. "We mistake that for feeling poor."
Get a grip
Sure, you feel like your wallet gets walloped every time you buy gas or groceries, but are you really taking a financial beating?
Without a handle on where your money goes, you overreact to prices at the pump and the checkout lane, says Gerri Detweiler, credit adviser to Credit.com and author of "Invest in Your-SELF: Six Secrets to a Rich Life." "A lot of people feel like, 'I have to put gas in the car, and I can't do " Detweiler says. "That feeling of a lack of control is anything about that,' causing a lot of people to rethink how they've been spending their money."
For example, if you're eating out twice a week, that can add up to $300 or more a month. Just cutting back somewhat on meals in restaurants can offset the extra $25 a week you're spending on $4-a-gallon gas. "Keep track for a month of where your money is going," Detweiler says. "Then you know where you can make changes so you don't feel deprived."
Cut out consumer porn
Fancy catalogs, exotic travel magazines, home makeover shows -- they all make you lust for stuff you didn't even know you wanted -- then make you feel poor when you realize you can't afford them.
"Avoid any activity that is tempting and makes you feel poor, like going to the mall or browsing the Internet for deals," says Gurney. Instead of mindlessly window-shopping, decide where you really want to spend whatever discretionary dollars you have.
"This awareness will pay off in greater satisfaction with the time and money spent," Gurney says. "Re-prioritizing money in the future is another way of controlling money instead of it controlling you. It's a very powerful exercise in avoiding feeling captive."
Stop scaring the kids
Phrases like, "We can't afford it" and "We don't have the money" can scare children into thinking the family is broke, says Howard Dvorkin, founder of Consolidated Credit Counseling Services Inc., a national non-profit agency based in Fort Lauderdale.
He cautions against sheltering the kids from all discussions of family finance. Instead present them with the right message and use any family belt-tightening as a way to teach youngsters about handling money.
"You don't want them to have anxiety about money," Dvorkin says. "Bring them into the conversation and let them see how they can contribute. Say, 'We didn't budget for that' or 'You need to save up out of your allowance.' You need to communicate so that they can understand it. You don't want to rob them of their childhood."
Gurney suggests parents sidestep the stress of saying no by encouraging activities where kids can use their creativity to have fun, like organizing a picnic with other families. "Each family member can research and plan an activity which helps them feel involved and positive," Gurney says. "Families can turn their current tight hold on the purse strings to a positive experience."
