|Gary Foreman is a former Certified Financial Planner (CFP) who currently writes
about family finances and edits
The Dollar Stretcher website
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I am 22 years old and I live in NYC. I am in some serious debt,
which I have turned over to a debt consolidation company. I make a
decent amount of money, however, I can't seem to keep it for more
than a few hours. I end up spending my entire paycheck within the
first day I have it....seriously. I am trying to find a support
group in NYC, but am having no luck. I know I have a problem and I
can't continue to live like this.
My Dad used to call it 'letting money
burn a hole in your pocket'. Call it what you will, but it's a
serious problem for some people. If you regularly spend all the
money you have, you'll always be broke.
There are two main strategies that
Donna can use. First, she can severely limit the amount of cash and
credit that she has available for spending. Second, she can change
the way that she relates to money.
Let's begin with the tools that will
limit how much money Donna has at any time. If her employer offers
it, she should use direct deposit. If that's not available, she'll
need to deposit her entire check as soon as she receives it.
Donna should use payroll deductions
to force savings. Otherwise, she's probably going to have trouble
accumulating any. Deductions are also a good way to save for
retirement. She might want to consider making regular monthly
contributions to an IRA or mutual fund account.
It's foolish for Donna to carry much
cash. She'll just be tempted to spend it. Before she leaves the
house in the morning Donna should list the items that she expects to
buy that day. Include everything. Even snacks and the daily paper.
The idea is to only carry the cash she'll need and get in the habit
of only making purchases that are on the list.
Donna has already seen what credit
cards can do. They're meant to be convenient to use. And, that's the
problem. It's easy to keep charging until she reaches her credit
limit. Leave them at home unless they're needed for a planned
Once Donna limits the amount of cash
and credit that's available, it's time to change the way that she
relates to money.
She already recognizes that it's
easier to reach your goal if other people are involved. Contacting a
local social services agency could turn up a support group for
Another source of support is an
'accountability partner'. It could be a friend, relative or mentor.
Someone who can be trusted. Donna would regularly report to the
partner on how well she was doing. Sometimes just knowing that we'll
have to confess our failures is enough to keep us from stumbling.
That partner can also be helpful when
Donna does suffer a setback. And they will come. A compassionate
partner can help dust us off and get us back on track.
If you can't find someone to hold you
accountable, create a system to hold yourself accountable. It could
be as simple as keeping track of the days that you stuck with the
morning spending list.
Donna should also consider using a
budget. It would put her on notice when she had already spent the
money that she had allocated for entertainment, clothing or any
Avoid the places that are most likely
to trigger spending. Just as the alcoholic can't hang around bars,
the spendaholic shouldn't go window shopping. It's like dancing with
the devil. You're bound to get singed.
Use rewards and punishments to
encourage good spending behavior. We all respond to appropriate
rewards. Donna might find that she's never had the money for good
seats at a Broadway show because the money is always gone. The idea
is to pick something that had not been attainable under the old
system and then reward yourself after an important goal has been
It will get easier the longer you
persist. It's hard to break old habits. Especially if they contain
some behavior that could be addictive. Remember that tomorrow will
be easier than today. But you have to get through today first.
Donna has already taken the first two
steps. She's recognized the problem and started to look for help in
solving it. Hopefully she'll be successful in using some of the
tools to take control of the situation and begin to build a new
pattern of relating to money