Monday, March 05, 2007

My New Truths


I've been reading Suze Orman's book 9 Steps to Financial Freedom at the behest of my therapist. She seems to believe, and I agree with her, that anxiety about money is the root of my problems. At first, my brain seized up at the very idea. I cannot read about accounting. My head would literally fall off, roll to the floor and down the basement steps where my cat would snack on it for a week. But then I told myself to buck up and give it a try.

So, I borrowed a copy of the book from my Mom and began reading it this weekend. And you know what? It's very engaging. In the beginning, she provides anecdotes of people who freaked out over money and then she wanted the reader, me, to think about, well, me. So, anyone who wants to talk about me with me is automatically my very best new friend.

One of the pieces of advice is to start thinking positively about money. Instead of thinking, "I will never have enough money," or "I can't keep track of my spending," or "Crystal Meth sales are down so much, I'll never be able to pay off my debt to Archibald the Meth King," one should come up with new financial "truths" and obsess on them. Write it down 25 times a day. Repeat it as a mantra when walking the dog or changing diapers.

So, I've come up with a handful and thought I'd bounce them off you all:


  1. I am able to support my family and the life that we want to live.

  2. I will have the money to go to Bora Bora in French Polynesia and stay on a hut on the water...or to go to Disneyworld and stay at the Polynesian.

  3. I will be able to persuade Doc, by hook or by duct tape, to build a spending plan based on the past two years of expenses/income.

  4. I will be able to put 200 clams a month into a savings account.

  5. I will not need to use credit cards ever again.

What are your truths?

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11 Comments:

Blogger deadspot said...

Motley Fool is another good financial guide. One of the things that I really liked was they way they bluntly tell people that the market will not beat the cost of your debt, so investing while you're still paying down debt is a losing game. Your first goal has to be paying off your debt.

However, their analysis of home ownership was dead wrong. You don't compare the return on your mortgage (tax deductions, increase in resale value, etc.) to investment returns, you compare the return on your mortgage to the return on renting. The alternative to paying a mortgage is not a money market fund unless you plan to invest from a van... down by the river.

On a second house, you can compare the return on your mortgage to investing in something other than meeting your need for shelter. Assuming of course that the Meth King hasn't burned your first one to the ground.

Monday, March 05, 2007 9:31:00 AM

 
Blogger Jenny Jenny Flannery said...

Thanks for the suggestions, deadspot. I almost understood what you were talking about regarding returns and money markets.

In your first paragraph, though, I might disagree, and I say "might" because I'm not totally sure I understand what you are saying. I am going to "invest" in a savings account while I'm paying off my debt. That way, when emergencies come around, like they sometimes do, I can use savings instead of plummeting further into debt. But, I guess a savings account isn't really a money market, is it?

I'm not sure I'll ever have to worry about a second house, though, unless it is a van...down by the river. (tee hee)

Monday, March 05, 2007 9:44:00 AM

 
Blogger Unknown said...

Good for you! Getting your financial house in order is going to take a TON of stress off of you. Set precise tangable goals and save steadily. In a year or two you'll be amazed at all you've accomplished. You can do it.

Monday, March 05, 2007 10:56:00 AM

 
Blogger deadspot said...

It depends on how high the interest on your debt is. If it's on a credit card, you're probably better off paying it down first and building up a reserve later.

Let's say you put $100 into your savings every month for a year, then have to spend $1200 to pay for a car repair.

The second month you would collect interest on $100, the third month you collect interest on $200, etc., so you will have some cash left over from the interest.

The alternative would have been to pay off an extra $100 on your debt each month, but at the end of the year, you have to put $1200 back on your card becaue of the car expense.

The second month, you would pay interest on $100 less debt than if you put it into savings. The third month, you pay interest on $200 less debt, etc., until just before the car expense, you are paying interest on $1100 less debt.

If the interest rate you're paying on the debt is higher than the interest you get back from the savings account, then you'll be better off paying down debt.

The upshot is that it feels better to build savings, but it may be better to pay down debt depending on the rates. They probably explain it better than I am...

On the other hand, they also said that it is important to do what you're comfortable with. If you are paying down debt but constantly worrying that you have no savings, then it isn't worth it. The extra money isn't worth going crazy.

Monday, March 05, 2007 11:53:00 AM

 
Blogger Jenny Jenny Flannery said...

Thanks Dave!

Deadspot...Someday, I'll be able to keep up with you on this topic. Thanks for explaining it to me. I think I see what your trying to say, about weighing the benefits here and figuring out which option would save me the most money, but my choice to build a savings account is completely emotional at this point. I don't want to use credit cards anymore. Peroid.

Monday, March 05, 2007 12:04:00 PM

 
Blogger Phil said...

I think you and I are similar when it comes to finances.

My truths are: Pay down debt. Save what I can. I have three levels of savings for the kids: College 529 savings, a 5% money market savings account, and a custodial IRA. My credit score has gone from the low 400 to 610 in two years. You can make progress.

Monday, March 05, 2007 1:13:00 PM

 
Blogger Jenny Jenny Flannery said...

My credit is rating is not a problem, but it may be, if I don't take the reins on this. I need to be as informed on financial matters as I am on American Idol.

Monday, March 05, 2007 1:15:00 PM

 
Blogger deadspot said...

This comment has been removed by the author.

Monday, March 05, 2007 1:47:00 PM

 
Blogger deadspot said...

Ack. I don't know what happened to that last post...

Anyway, you're right. You should do what makes you happy. I think it was Lao Tzu that said "He who is content is wealthy." You can't buy peace of mind.

Monday, March 05, 2007 1:51:00 PM

 
Anonymous Anonymous said...

can we DO #5 in a world like we've got?? Do you mean using strictly cash or just debit cards??

Second question: now that you've made your "truths" (why are we putting this in quotes all the time, again??) what are the STEPS you need to ACHIEVE said truths? Are those outlined in the book??

Monday, March 05, 2007 6:13:00 PM

 
Blogger Dale said...

I can help you with the Meth thing Sweet F.A.

Monday, March 05, 2007 10:36:00 PM

 

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