I have been using The Meaning of Lila to illustrate how not to budget and how not to manage finances.
Emotional Investment in Material Goods
Living in societies founded on material consumption, we invariably define ourselves by things. They give out life meaning. Over time, this will lead to financial ruin.
Impulse Buys and Rationalization
One of the mistakes most people make is giving in to impulse buys. We decide that we NEED something, that it is a necessity. To avoid such behavior, it is important to gain some discipline. The best solution is never to buy something immediately. Always wait a day before buying anything, and the bigger the purchase, the more time you should wait. I would suggest a 1 day for each $100 rule. If you want to buy something worth $100 or less, wait one day. If you want to buy something worth $1,000 wait 10 days, if you want to buy a car, wait at least a few months. This will give you the time to think it through to see if you really need it and it will give you the time needed to do the research to see if it is a good purchase.
Knowing When to Seek Help
One of the mistakes most people make is not knowing when to seek help. I was Lila. I waited to long to see the help of credit counselling. I did not take the necessary steps to sort out my financial problems. Of course, they are discussing seeking help with debt while eating in a restaurant; spending money you do not have is the road to financial hell.
Stop Spending, Pay Down Debt
Such a simple concept, yet so hard for must of us to accept. Most people have to hit a financial wall before they take action.
Failure to Plan, Expecting Problems to Resolve Themselves
Your problems will not solve themselves. Dealing with debt requires budgets, it requires financial discipline.
Not Knowing How Much You Owe
Like Lila, I had not idea how much exactly I owed. Ignorance is not bliss. You have to face your problems, you have to acknowledge the problem.
Credit Cards and Living Beyond Your Means
Credit cards create the illusion of prosperity and allow us to live beyond our means. Cut those cards! Learn to love and respect the person you are and not the person with what you buy.
The Little Things
Lila of course loves Starbucks and spends a lot of time there. Her Starbucks closed and she is checking out the newly renovated McDonald’s. Of course, the best way to save money is to brew your own coffee. Neither Starbucks nor McDonald’s will save you money.
Getting Your Priorities Straight
Getting out of debt and resolving your financial problems requires you to get your priorities in order.
The only solution to debt and financial crisis it to exorcize your inner Lila. Learn to live within your means, spend less and never rely on credit cards to finance your lifestyle.