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Controlling Bad Spending Habits

Rising interest rates and soaring gasoline prices are raising fears among many
Kentuckians that an economic slowdown, or even a recession, could arrive within
months.

With this uncertainty on the horizon, now would be a good time to consider reducing
debt and, in a worst-case scenario of job loss, look for a “lifeboat” to survive
choppy economic seas.

While there is little you can do to prevent a layoff, you can reform bad spending
habits now to prepare for any calamity.

Suggestions from financial planners range from adjusting the thermostat to polishing
up your resume. Here are several suggestions for reducing debt and saving money.

Face reality. List all living expenses, and then analyze how much, if
any, they can be reduced. Do you really need those premium channels on cable TV?

Grocery shopping. Go to the store no more than once a week, and do not
go without a list. Remember that the more expensive items are usually on the upper
shelves, so be sure to look for the bargain items on the lower shelves. Watch
the newspaper for coupons. Manufacturers last year distributed a record 315 billion
coupons, and users saved over $5 billion.

Dine inexpensively. To keep your financial “belt-tightening” more palatable,
let yourself splurge once in a while by going out to an elegant restaurant. But
go at noon, not night. At lunch, a slightly smaller portion of a signature dish
is often priced 10 percent to 30 percent below the price on the dinner menu.

Savor some cultural bargains. Call the museum or theater that interests
you and ask about discounts. Most offer lower-priced tickets on certain days as
well as free events.

Dust off your library card. Libraries these days are an excellent free
source for all kinds of entertainment. For “at home” entertainment, scour the
video section for something you missed at the movies. If you are taking a long
car trip, head for the books-on-tape section. Many libraries also have computers
with Internet access and will provide instruction on how to use them.

The thermostat. You don’t have to live in the dark to cut utility costs.
Lower the thermostat a few degrees in the winter and raise it a few degrees in
the summer. Consider closing off part of the house, especially if the older children
will be going off to college in a few weeks. Ditto for the rec room in the basement,
if no one uses it anymore.

Job shopping. If you fear your job may be in jeopardy, or perhaps you
want to explore a new one, polish up that resume. Choose a target job and find
out its required skills, knowledge, and experience.

Once you’ve decided to take some steps to reduce your debt, you must then convince
yourself that overspending is not the right way to live.

Implement a spending plan that calls for living on your income and giving up those
trips to the mall when there’s nothing in particular that’s needed.

Get your children involved in your war on debt, suggests a report in Money World.
Start teaching children the value of money when they are young so they won’t become
overspenders, the magazine urges.

Family experience can extend several generations, write Jerry Fletcher and Kelle
Olwyler in Money World. Whatever your habits, behavior, and problems in
dealing with money, take a close look at the habits and attitudes of your parents.
How did they rear you to relate to money? How did they, as role models, relate
to it? You will likely be amazed at their influence on you.

Money Myths

Money buys happiness. False.

It does, but you have to keep buying to sustain the feeling. What you really want
is contentment, or that feeling of well-being that can’t be purchased. The happiest
people don’t necessarily have the best of everything; they just make the most
of everything.

Spending shows love. False.

“Your loved one may appreciate and cherish far more such expressions as hugs,
kisses, heartfelt compliments, or an offer to wash the dishes after dinner,” says
Olivia Mellan, author of Overcoming Overspending: A Winning Plan for Spenders
and Their Spouses
.

Making more money will overcome spending. False.

“If you overspend, the solution isn’t to earn more money,” Mellan says. “This
just adds fuel to an out-of-control fire.” Having more money makes it easier to
ignore the underlying habits that make you spend recklessly in the first place.

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