A Financial Diet Could Be Just What You Need
Most of the talk on financial blogs is pretty negative these days. Most people are discussing the economic slowdown, the stagnating housing market, the rising number of bankruptcies, and increased risk of having a serious recession.
The truth is, many of us need to go on a personal financial diet. Is it time to shed some of that extra weight? In good times we all tend to extend ourselves a bit more than we should. Then when the inevitable slow down hits we have no choice but to cut out the fat.
Just as with dieting, keeping your finances under control is mostly a psychological battle. You have to create a plan of attack where you detail how much you're going to spend and what you're going to give up. Then you have to develop techniques to keep yourself on the straight and narrow.
Convincing yourself to avoid binge spending is one of the most important commitments you can make to your plan. When we have extra money to spend, buying non essentials is a big part of the fun. But once you've decided on a slimmed down budget, it is important that you not see compulsive spending as an option. If it's not in the budget, don't buy it.
At the same time, we're all human and we make mistakes. If you do slip up and buy something you don't really need don't berate yourself. Just go back to your economic plan and be wiser next time.
On the other hand it is probably good to reward yourself with small indulgences from time to time, just to take the drudgery out of the "diet". In fact it might be a good idea to budget for these little indulgences. Just try to stay within the budget and you'll be rewarding yourself while staying with the plan.
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Published March 24th, 2008
Filed in Real Estate
