Apr. 9, 2019 "Money just like diet": Today I found this article by Elaine Smith in the Star Metro:
Earning a finance degree from a prestigious business program is no guarantee you’ll know how to manage your personal finances. Just ask Ashley Feinstein Gerstley, author of The 30-Day Money Cleanse: take control of your finances, manage your spending, and de-stress your money for good.
“I was a finance major at Wharton (the University of Pennsylvania’s business school), worked in investment banking and corporate finance and still knew nothing about money,” said Feinstein Gerstley.
“It occurred to me that if I didn’t know, who did?”
As she began reading about personal finance and blogging about her own experiences, Feinstein Gerstley found that people were reaching out to her to share their money woes. The 30-Day Money Cleanse grew out of an online course she developed to try to help people create healthier relationships with money.
We asked Feinstein Gerstley about why people have so much trouble handling their own finances — and how they can do better.
Why do you consider money and food to be so similar?
Both money and food are really emotionally charged. It sounds simple to control them: money-in should be greater than money-out; calories-in should be fewer than calories-out. However, if it were that easy, there wouldn’t be a billion-dollar diet industry. We relate to them in similar ways, and they are both things we can’t avoid.
What is an “expense onion?”
When you think about an onion, the outer layers are the first to get really hard and crunchy and fall off; these are comparable to the financial changes that it’s easy to make, such as using transit more often, instead of taking cabs. The inner layers are those financial behaviours and habits that are tougher to peel away.
The idea is not to force new behaviours or to be too restrictive in a new spending plan. Start with the crunchy, easy layers and as you progress through your money journal, other layers will become crunchy and you will be left with things that make your life more rewarding and fuller.
Why are the words we use to talk about money so important?
The language we use in talking about money affects our mindset. We need to reframe the talk around personal finance so people stop viewing budgeting as something painful that they should do. Instead, I want them to see it as an experience of self-love, one that will allow them to leave undesirable situations and take risks in their careers.
We need to be careful with the language we use, because it helps create the relationship we have with money. Think about cutting versus letting go; the former implies that the money is being pried from your hands; the latter indicates that it’s your choice to stop spending it.
Speaking of language, what is a “happiness allocation?”
It’s a much more fitting term to describe an annual budget, or a spending plan, because it is all about allocating your money in a way that makes you truly happy — getting the maximum joy per dollar spent.
It allows you to see what’s available for your short- and long-term goals. When you don’t look at the annual picture, you miss out on the larger impact of regular expenses and on the money you spend for occasions that don’t happen regularly, such as holidays, weddings and trips.
I’ve always spent money to have a good time. Why do you think frugal joys will make me happy?
Frugal joys are free or inexpensive things that make you really happy. You don’t have to replace the things you love with frugal joys; you can simply add more joy to your life without adding expenses.
They are also great tools if you want to replace expenses, since it means you won’t have to give up joy if you spend less. Test out a few each week; preferences are very individual, so see which ones work for you. I offer 100 examples, such as exploring a new neighbourhood, playing with a puppy and reading a really good book.
I’m not very disciplined with money, so will this 30-day cleanse actually work for me?
Self-discipline doesn’t work with food and money; I find that we rebel against it. This is all about gifting yourself and understanding that how you treat yourself now is at the expense of what you really want. It’s a reframing, so you’re not battling yourself to get what you want. It’s a beautifully designed, colourful way to improve.
It’s about helping you achieve your important goals, rather than becoming prey to marketing about what you should want.
It doesn’t matter who you are now around money; you can always get better.
https://www.thestar.com/life/advice/2019/04/09/personal-finance-expert-says-a-30-day-money-cleanse-can-help-change-bad-spending-habits.html
Americans' debt loads, like our waistlines, tend to expand as we approach middle age and then gradually diminish as we get older.
Some people, though, are yo-yo debtors, fighting an ongoing up-and-down battle with debt.
By age 21, Chris Browning of Long Beach, California, had accumulated $5,000 in credit card debt — mostly from eating out and trying to impress his then-girlfriend, who is now his wife.
After several failed attempts, Browning, 30, made and stuck to a budget. He cut back on expensive meals, looked for free entertainment and slowly paid down the balances until he was debt-free four years later in April 2012.
That didn't last. As the couple prepared for their wedding that November, debt crept back in.
"By October 2012, we had over $14,000 in credit card debt. Then from there things just snowballed," Browning says. "Between finding a new place to live, school costs, medical bills and just poor decisions, our debt grew to just under $27,000 by November of 2014."
LOOK BEYOND DEBT TO OTHER SIGNS
The vast majority of American households — roughly eight out of 10 — carry at least some debt during their working years, according to the Federal Reserve's Survey of Consumer Finances.
The median amount owed peaks when the head of household is between the ages of 45 and 54 and diminishes afterward.
Owing money isn't necessarily a crisis unless you consistently live beyond your means, putting you at risk of bankruptcy or a lower standard of living.
—You're struggling to make minimum payments.
—Your net worth — what you own versus what you owe — is shrinking rather than growing over time.
—Your debt prevents you from saving for important goals, including retirement and emergencies.
Not having savings also can contribute to the yo-yo phenomenon, where people pay off debt only to face a big unexpected expense or job loss that causes them to reach for credit cards again.
Careening back into debt can be deeply discouraging and stressful. That's why debt experts, like weight-loss experts, recommend a slower, steadier approach to vanquishing debt . Among the most important principles:
—Don't be in a rush to pay off low-rate mortgages and student loans. Focus first on toxic debt, such as credit cards, that erodes your financial security.
—Make saving a priority even as you're repaying debt. That means having at least a $500 emergency fund and contributing enough to get the full company match for any workplace retirement accounts.
—Aim to make lasting changes in the way you spend instead of trying quick fixes.
LIFESTYLE CHANGES MATTER
Browning and his wife, Vina Gainer, 29, tackled their debt from both ends: by cutting their spending and increasing their $60,000 household income.
Browning found a job that paid $1,200 more a month and experimented with a few side gigs, such as selling stuff on eBay and delivering food for DoorDash.
"We weren't really talking about what we were spending. We just spent it," Browning says.
Both say the lifestyle changes were hard at first, and Browning says it helped him to seek out other people who were paying off debt, in real life and online, for support.
"I think you can forgive yourself a little more when you realize that you are not the only one that has made mistakes and that there are others who have accomplished what you hope to," Browning says.
The couple paid off their last credit card bill in February and they are on track to have a six-month emergency fund by the end of the year.
Being in debt "was just too stressful," Browning says. "I don't ever want to go back to that place."
This column was provided to The Associated Press by the personal finance website NerdWallet .
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