By Harriet P. Gross
Have you made some resolutions for this new year? Everybody does — and soon finds out that those like “lose weight” are created to be broken rather than kept.
But given the state of the U.S. economy today, and in the wake of the Bernard Madoff scandal (Oy vey! That latest shanda for the Jews!), all of us, regardless of income and/or savings level, should resolve to be financially smarter in 2009 than ever before. An easy way to get started is to read “Living Rich by Spending Smart,” a practical book by respected personal finance expert Greg Karp. If you don’t have time for the whole volume, here are some excerpts from it:
“Self-deception and lack of control are the chief reasons for many poor spending decisions,” he says. “Whiny explanations about wasteful purchases are nothing but poor excuses for bad spending behavior.” Here are six clichés that he maintains many freewheeling spenders treat as mantras:
1. “I could die tomorrow, so I’ll live for today.” An immature attitude to justify buying it now, paying for it whenever. A primary excuse for spending and not saving.
2. “I work hard, so I deserve it.” Like “a 4-year-old throwing a tantrum in a toy store, yelling ‘Gimme! Gimme!’” You also deserve a retirement where what you eat isn’t dog food, Karp says.
3. “I don’t have a head for numbers.” So what? Nothing but an excuse for not paying attention to what’s in the checking account, according to Karp. Today, lots of help is available.
4. “I’m too busy to compare prices or manage money.” Turn off the TV one evening a week — that’s all the time you need. Or, hire a reputable financial planner/adviser: “more costly than doing it yourself, but better than doing nothing.”
5. “It’s an investment.” Not most of the things you buy, because they “plummet in value the moment you leave the store — or the car lot,” says Karp. “They are EXPENSES. Calling them investments is self-delusion.”
6. “I don’t earn enough to save money.” According to Karp, “Saving is not about what you earn, it’s what you KEEP. If your paycheck truly covers only bare necessities, it’s time to work more hours, or earn more for the hours you work.”
“How to Get More of What You Really Want” is the subtitle of Karp’s book, with chapters such as “Smart People, Dumb Spending” and “Get Financially FIT” (those capital letters standing for Food, Insurance and Telecommunications). He also has one called “What a Waste!” in which he recommends we all stop buying bottled water, and think more than twice about purchasing extended warranties — most of them, he feels, represent wasted money.
This last reminds me of a witty old quote attributed to Clint Eastwood: “If you want a guarantee, buy a toaster!” The whole state of the financial world today makes me look back and shake my head in some amazement: Last week, I was putting gelt (paper, of course!) into two envelopes as I awaited the arrival of a pair of visiting grandsons from out of town, and an equal amount into a Christmas folder for my faithful mailman, who is retiring after many years — and since for almost 25 years, without any request from me, he’s been hand-delivering to my door any packages that don’t fit into our mailroom box instead of leaving claim slips that cost me time in trips to the post office, I’ll sorely miss him. And it dawned on me, as I counted out the bills, that the total amount of these three “little” gifts was more by one-fourth than my salary for a full week’s work at the first full-time job I ever had. Of course, that was way back when, in the mid-’50s.
If you want to learn more about Karp and/or read his book, he’s easily located on the Web; there’s also lots of information available through Amazon, Borders, etc. If you’d like some more punchy bits of advice to take into the new year along with Eastwood’s, try these:
From Senator Dianne Feinstein: “Winning may not be everything, but losing has little to recommend it.” (Except for that weight resolution, of course.) And from the always right-on Will Rogers: “The worst thing that can happen to you can be the best thing for you, if you don’t let it get the best of you.” Can this possibly play out positively in regard to the many — individuals, charities, foundations, other organizations — who have lost fortunes to that all-time ganif, Bernard Madoff?
By Harriet P. Gross