Credit Carbs

Credit has become the carb of the financial world. We know it’s not good for us in excess, yet we stuff our faces at the slightest hint of temptation. Using credit outside of our ability to pay a monthly balance in-full leaves us bloated, guilt-ridden, and overweight in debt. So why do we do it? Let’s check out some science: It turns out that just like fast-digesting carbs stimulate regions of the brain involved in cravings and addiction, use of credit cards can also have a physiological effect on users. In Credit Cards as Spending Facilitating Stimuli: A Conditioning Interpretation, Richard Feinberg found that hypothetical willingness to pay was significantly greater when credit card logos were visible than when they were not. According to Scott Rick, Ph.D. in Psychology Today, the results from Feinberg’s study suggest that consumers have been “conditioned to associate credit card logos with consumption.” Rick adds that “Exposure to credit card logos may therefore stimulate craving, much like smelling fresh cookies stimulates hunger.” There it is. We’ve all tried eating a sugary treat to help get us out of a funk at one time or another. When it comes to consumer psychology, Ian Zimmerman, Ph.D. notes that impulse buying is also linked to anxiety and unhappiness. According to another survey commissioned by nerwallet.com, almost half of Americans say emotions have caused them to spend more than they can reasonably afford. Once we start eating that pasta, it seems like a forgone conclusion that we’re going for seconds. …

Valentine’s Day Costs WHAT?

About $19.5 billion was spent on Valentine’s Day last year. Hard to believe that we pour that much money into a holiday designed to show loved ones we care about them.  Even spending $100-$200 on this special day can put a serious hole in your budget if you’re not prepared. What does Valentine’s Day mean to you? To me it is a time to be creative and show my loved ones how much I value them. I always try to come up with fun ways to express my feelings without being too over the top. I do my best to avoid spending a small fortune on mushy holidays. Here are a few ways you can stay on budget this holiday while showing that special someone you care: Tour Your Own City If you are anything like me, you love trying new things or seeing a part of your city you haven’t experienced before. Your city should have a list of weekly events you can attend for a small fee or for free. Take advantage of this holiday and be a tourist in your own city. It will give you a different perspective on the city you live in and you may learn something new about your significant other. Stepping outside your comfort zone and trying new things can show you a different side to your partner. Check out local museums or research trails at a nature reserve. Think outside the box and try something new. You never know where it could …

3 Money Lessons from a Fender Bender

Ice Sucks! If you’ve never been in an accident, it’s awful. Your nerves get all riled up, your hands shake and you have to concentrate really hard to figure out what to do next. It’s an emotional rollercoaster. The whole 200 feet I slid downhill (if not further), my tires may have just as well been skis. I knew by the last 15 feet that I was going to hit the car in front of me. He was stopped at the light, and I had nowhere to go — no median, no curb, nothing to stop me but his bumper. It’s an awful feeling knowing that your accident is going to mess up someone else’s day, knock them out of their routine, or worse — injure them. Luckily, everyone was safe. And the man in the other car was incredibly nice, very forgiving, and he put up with me repeating myself, “I have full coverage….I have full coverage….” Because, you know, nerves and rambling go hand in hand. The experience was awful. I damaged my own car. I damaged someone else’s. I put a dent in his car and his day. Over the phone, my insurance lady reassured me that everything was fine, it wasn’t the end of the world and that everything would be taken care of. (Bless her heart, calming me down like that.) Now, to top it off, you should know: I had just invested $800 in routine car maintenance the week before my accident (literally five …

Need Help With Getting Out Of Debt?

I totally thought my wife had hit the Listerine too hard that morning. “$20,000 in a savings account?!” “Yes” she said as calm as can be. “Twenty-thousand dollars would make me feel safe and secure and then you can do whatever you like to do.” At the time we were 23 years old and working to blast away about $50,000 worth of debt between credit cards, car loans and student loans (not to mention a couple of car repairs I’d had to finance). All of this on an annual gross combined income of roughly $76,000. The question she answered from me was: How much do you need in savings to feel safe and secure? At the time I thought she was insane. Why would anyone need those kinds of funds set on the sideline when they could be invested in the market or real estate or FUN? While I’ll get back to my feeling about how much to have set aside for safety/emergency reasons (as well as what my wife and I ended up doing),  it seems the question how much do you REALLY need in savings has become quite popular. In my opinion, it was the study done by the Federal Reserve that began prompting the question more and more. The results, after all, were staggering — 46% of adults reported they would be unable to cover a $400 expense without selling something of value or borrowing the money from elsewhere. It was covered widely from Fortune magazine to …

Should You Do Allowance With Your Kids? Here’s What We Do…

To pay or not to pay, that is the question. On the heels of my TEDx London Business School talk now on YT, I’ve been getting lots of questions about how we do allowance in our family. And truthfully, the answer would’ve been, not well… up to just a couple years ago, but in preparation for my talk I dove headlong into allowance programs that work with kids, how much to pay, what to pay for, if chores are tied to pay, etc. But before I dive into the mechanics of how and what we pay our kids, let me first cover why I think this concept is so important and worthy of a listen. At a money smart week event where I was presenting a father in the audience asked what to do about his 20 year old daughters who texted him every time their checking accounts were out of money. He said the texts would come in every week to 10 days, but that they had been given enough money to last for a couple weeks or more.  When I asked him what he does when they text he said, “well I put money in their account” — which prompted my question — why do you do that?  He said, “well I don’t want my girls to struggle.”  At which point I asked everyone around the room, “did you struggle when you were 20?” “did you struggle when you were 20?” And everyone around the room nodded in agreement. …

Want To Get Out Of Debt? — Start Here.

At the age of 23 I was struggling under the pressure of nearly $50,000 in debt between student loans, credit cards, a car loan, and a variety of consumer debts. I remember putting purchases on my already-ballooning credit cards and rationalizing, “if I charge this, then I’ll have cash in my checking account.” My money programming was completely jacked. Looking back, I know exactly why and how it happened. My college career was one long social experiment. My Dad called it my ‘4-year break from reality’. I called it the longest and most expensive party I’ve ever been to. In the first few months of my freshman year, I signed up for a credit card through MBNA in exchange for a 2 pound bag of M&M’s and a seemingly unending source of fun (and ultimately, frustration). Upon graduation, I left my University with a healthy $8,000 in credit card debt at nearly 25% interest. (Almost all of it was spent at a place called Shagnasty’s. *true story*). Within four years I was completely debt free with the exception of a mortgage. For the past decade, my wife and I have lived a life of freedom and flexibility having now amassed a high 6 figure net worth. I want to share with you how to do it yourself… What got you here, won’t get you there. You Can Break Free This post is for anyone that wants (as desperately as I did) to break free from the bonds of debt. It is …

Student Loan Payback – Are You a Cow or a Buffalo?

When a storm rolls over the Colorado Rockies you can see it coming from miles away. The billowing clouds are a visual representation of the impending doom that’s about to rain down (quite literally) on the plains to the East. Out on those plains there are cows grazing that see the storm coming, and because cows want nothing to do with standing in the rain, they begin walking, trotting, then running the opposite direction. As they run to the East, the storm eventually overtakes them and they continue running with the rain. The effect being a prolonged bout of hanging out in the storm. The buffalo, on the other hand, also grazing in similar fields, see the storm coming over the mountain range and begin running headlong into the storm. The buffalo, bold in their approach, end up being in the rain for a fraction of the time the cows were. Instead of running away from the problem, they run straight into it. So when it comes to paying back student loans, are you a cow or a buffalo? When we produced the documentary Broke, Busted & Disgusted about the rise of student loan debt in America, we interviewed a young man named Justin who buffaloed his way through his loans. When Justin graduated from a state university with $32,000 in debt, he said it never occurred to him he had no money, instead he looked at it as if he had -$32,000. With $600 to his name and no …

8 Money Questions To Ask Your Spouse

Not On The Same Page Financially? Here are 8 Questions To Ask Your Spouse… Having been married for almost 17 years, my wife and I often fall victim to the assumption that we know what the other is thinking. We make decisions or snap judgments because we erroneously believe we know how the other might react before ever having a real conversation. While money issues are often listed as a primary cause of divorce in America, I tend to believe that the larger issue is money wasn’t ever REALLY talked about in the relationship to begin with and there were simply massive assumptions made about your finances (by both partners). For partners that have been together for a long time, perhaps it’s an unconscious attitude toward money that you both need to bring to the conscious level. To help you bridge the gap that may be growing in your financial relationship with your spouse, consider asking the following questions: How much do you need in savings to feel safe and secure? I first learned the importance of this question after reading David Bach’s Smart Couples Finish Rich. Bach suggests in the book that men and women have different risk tolerances and each may feel more secure with a different amount in savings. When I asked my new bride how much she needed to feel safe and secure, her answer made me think she’d hit the listerine too hard that morning… (her answer was $20K). My recommendation is figure out how …