Facing Fiscal Reality
OK, I roll back my timeline to when I turned 21 and attended my first legal-to-drink New Year’s Eve party. Actually I don’t really remember the party but I do remember waking up the next day and swearing to never drink like that again. Of course I forgot my resolution—more than once–and the result was always the same: I wake up with a bad hangover and pronounce that I was never going to drink again.
You are probably wondering what my story could possibly have to do with after-Christmas spending blues, but it does, and it has nothing to do with having a drink and everything to do with drinking to excess. Just substitute shopping for drinking and you get the picture.
Every year I hear from clients who have gone overboard on their holiday spending and have to face fiscal reality when the credit card statements start showing up. Some struggle for months to pay the bills. I used to wonder why these people kept making the same painful mistake year after year. It was déjà vu over and over again!
In the early years of my career I tried to help people to realize that they could avoid this annual trap.
All they needed to do was set a Christmas budget, create shopping lists and pay cash for their purchases–all common sense concepts that every one ignored. When I tried to understand what was going on, I thought back to my youthful hangovers. Of course, I knew that if I did not drink to excess, I would not suffer, but my common sense was not very convincing at that time in my life. The rewards of enjoying my friends, the bar scene, and the new-found freedom of my youth were too strong. Likewise, common sense isn’t in play when it comes to Christmas shopping and holiday spending.
So I shifted gears with my clients and stopped trying to change their habits and just focused on helping them solve the resulting problem. The solution was to start using cash as soon as the holiday season was over and begin a serious assault on any credit card debt. I subscribe to the tortoise side of the equation: slow and steady progress. That means, in very plain English, that you stop using your cards and start paying with cash. By the way, taking your cards out of your wallet makes my solution much easier. Although this sounds simple it takes a strong sense of discipline and urgency to make it happen. The results are always the same as long as you stay the course: eventually you will have no debt!