Psychology

20 Valuable Personal Finance Questions to Ask Yourself

I recently read a very, very good personal finance book called Money Drunk, Money Sober (which I’ll review this Friday… oooh… the anticipation) where the authors made a brief suggestion of doing a personal inventory of your relationship with your money. At first, I was expecting it to be a rather boring listing of accounts …

Loss Aversion and Motivation: Using Your Natural Instincts To Get Ahead

Yesterday on my way to work, I was tuned into NPR’s Morning Edition and I overheard a story about two researchers using our natural instinct to avoid losses as a motivation to lose weight. The concept is called loss aversion and is summarized by Wikipedia as such: [L]oss aversion refers to the tendency for people …

Categories: Psychology

Nine Techniques for Developing Patience

The single greatest challenge I’ve faced since learning how to turn my financial life around is patience. I want to be debt free now. I don’t want to face the long journey from near-bankruptcy to financial independence. I practice frugality every day and I’m working hard to create more income, but the path from where …

Defeating Superman Syndrome: How to Progress Beyond the “Need” to Be the Financial Hero

When I was freshly out of college with my first high-paying job, I would constantly insist on paying for everything. Meals out with friends, lattes at the coffee shop, even sometimes shopping purchases – I felt this deep need to step in, bust out my plastic, and say, “I’ll take care of it!” This burning …

Misery is not Miserly: Breaking the Connection Between Spending and Sadness

One of my readers recently alerted me to an interesting article at CNN.com entitled Why Sadness Can Blow Your Budget. The article discusses the “misery is not miserly” phenomenon, where people who are experiencing sadness tend to be much less in control of their personal spending, prone to splurges and poor consumer choices. Even more …

Emotional Fulfillment and Financial Success

Recently, I read an excellent discussion on why we don’t save money. I originally intended to include it in my weekly roundup this week, but as I began to write my thoughts on the topic, I realized that I had a lot to say on the issue. Erica argues that we spend primarily for emotional …

Personal Finance and the Fundamental Choice

A few days ago, I reviewed in detail the excellent book The Path of Least Resistance by Robert Fritz. In that book, Fritz posits that most of the time, our lives take the path of least resistance around and through the obstacles of life, both those dealt to us by others and those within our …

Spending Far Less Than You Earn

Quite often, I talk about the value of frugality and spending less than you earn. For many of us, that’s a valuable mantra to repeat, because our tendency is to spend more than we should. Our challenge is to avoid spending, and we have to carefully talk ourselves out of it. Yet there are those …

Categories: Psychology

The Long Journey

Out of all of the challenging times since I began to turn my financial life around, I may be facing the most challenging of all right now. It’s not anything immediate or urgent. I have a nice healthy emergency fund to take care of that. It’s also not a temptation to buy anything, nor a …

Handling Unexpected Social Spending Situations

I’m currently on the west coast in the midst of a business trip. My hotel sits across the road from a shopping mall far nicer than any in the entire state of Iowa. Unsurprisingly, during a break in meetings, a group of us went over there to wander around. It didn’t take long before most …

The Stress of the Money Wars

A reader, who I will call Jane, wrote in recently with the following: I do NOT overspend. I work with a monthly budget, live very carefully and frugally, etc. It’s the debt, and the underearning. I am working on both, but wow is it hard somedays, some weeks, some months, especially when this worry eats …

Talking Myself Out Of Frivolous Purchases

I’ll start off this time by relating a few tales of recent shopping excursions where I talked myself out of making some seriously frivolous purchases. A week before Christmas, I was at an electronics store searching for a shower radio for my sister-in-law. While wandering around, I went through the flat panel television section. As …

Categories: Psychology, Shopping

A Letter to Myself in Ten Years

Many, many people write letters to their past selves, advising their earlier selves to avoid mistakes that they’ve made. I thought it might be interesting to take the opposite approach and write myself a letter today to read on my fortieth birthday. Dear Trent, Today is your fortieth birthday. Your son is twelve years old, …

Categories: Goals, Psychology

Heroes, Role Models, and Mentors: Finding People to Believe In

One of the biggest challenges I faced in my early adult life was the lack of a mentor or a role model for many aspects of my life, particularly the financial aspects. My life was completely different than what I had experienced growing up, thus I couldn’t draw on childhood examples. Most of my friends …

Going Inside The Wall: What Are We Fighting For?

I often talk about the “latte factor,” made famous by David Bach. In a nutshell, the “latte factor” refers to the fact that the raw repetition of a habit that costs money each time can drain you dry financially. For example, let’s say you have a latte each morning that costs $4, along with a …

Six Ways to Fight Back When You Lose Financial Focus

Once every couple months, I go through a period for about a week or so where I really wonder why I’m keeping my financial house in such tight order. I look around at what my friends and family are doing and I see them enjoying a lot of things with their money – and a …

Dealing With Shame About Your Personal Finances (And Anything Else)

When I first started sinking into a mire of debt, I began to really feel ashamed of my actual financial state. I would avoid the topic and when I couldn’t avoid it, I’d bluster my way around it while feeling really guilty and ashamed inside. Of course, I’d put a balm on this by going …

Categories: Psychology

Finding Motivation and Meaning in the Drudgery of Personal Finance

As passionate as I am about managing my own finances, I’ll be the first to admit that some of the tasks are rather dull to me. For example, filing away documents is about the last thing on earth I want to do, and I often put it off so long that there is a mountain …

The Personal Finance of Fear – And Why I Reject It

Quite often, I get suggestions from readers to review personal finance books that are promoted with a strong theme of fear. For example, just today a reader wrote to me with some eloquent questions from a book entitled The Coming Economic Collapse How You Can Thrive When Oil Costs $200 a Barrel. While I responded …

Categories: Psychology