Sunday, December 1, 2013

What Makes it a Good Gift is That it is Specific to the Person, Not that it Costs a Lot

Thank you to Susan Tompor of the Detroit Free Press for inviting me to share my thoughts for her story on how to avoid overspending at Christmas time. (One way would be not to purchase an 8x10 glossy photo of me holding up my book cover, which apparently you can do on the Free Press site. Talented though Kimberly P. Mitchell is as a photographer, I'm thinking they won't get all that many takers.)

I talk about planning ahead, and buying appropriate things for your friends and family throughout the year, especially when you find a bargain. This is, of course, that it will be easier to put into practice for next year than this one. One thing that I did not mention in the article is that I do not have any available lines of credit.

How do I avoid spending more than I have? I don't have it. I can't.

The real trick is keeping this mindset when you do have a couple of cards in your pocket.

Broke is Beautiful isn't really one of those penny-pinching guides.  My practical tips (like the tuna ramen recipe) were chosen more for humor than anything else. My goal with the book was to put some of the fun back into fun-ancial ruin.  While you're busy being broke, do not forget to live your life, stay sane, seek joy. If you wait until you're rich to become sane, you will be constantly crazy. Rich doesn't happen to most of us. That's OK, really. The original meaning of the world wealth was simply "well-being." So I wrote a book with tips on cultivating wealth in the old sense.

I'll share with you here a small excerpt from a chapter on credit card debt from my newer book Don't Screw It Up (Readers Digest), which is actually devoted to helpful life hints. (The Portland Book Review gave it four stars.) In the book I cover, among other things, a bit of the same financial territory as Broke is Beautiful. (The article in the Free Press ran right next to the horoscopes and mine said I was supposed to be a teacher  today.)

There is no great secret as to how to stay out of debt. It's all about not spending more than you earn. We'll call this rule number one. As simple as this sounds in theory, modern life is organized to make it difficult.

It begins with something that sounds eminently responsible: establishing credit. Young people, especially those who go off to college, are encouraged to get starter credit cards in order to pave the way for later mortgages and car loans. This is smart and rational only if you pay off your cards in full each month. Unfortunately, most people do not. Thus they begin to drift away from rule number one.

Being allowed to carry a balance can give you the illusion of more income. What do you do when you feel richer? You spend more. As you do, banks see you as an even more attractive customer and send an onslaught of credit card offers. The letters with these offers generally explain that you have been chosen for your excellent credit worthiness. This should not be enough to convince you that everything is fine with your finances, but interestingly it does. Psychological research has shown that if something is repeated often enough, you will start to believe it and doubt your own sense.

You may have a gnawing sense that you are falling deeper and deeper into a hole, but these constant letters from the financial experts (banks) reassure you that everything s fine and dandy. In fact, they say you are an especially fine example of a responsible spender. Do not listen to them.

Credit card companies make profits on a simple fact of human nature: We are overly optimistic about our futures. We always believe we will have more time and more money in the future than we have today. So you charge a new sofa today forgetting that between now and the day the bill arrives you will continue to have expenses. The raise you're sure you'll get this year is not guaranteed, and there is also no guarantee that your car will not break down.

Knowing this, you should approach debt with the respect and caution it deserves. Don't trust your future self to be more responsible or richer than you are today...

If you never borrowed a thing in your life and saved up every penny you ever yearned, you would not have a good credit score. The strategies that make you a good prospect for a lender are not necessarily the ones that make you the most financially secure. Staying out of debt in the first place may be a better goal than tweaking your score.

...When you are thinking about managing your finances, bear in mind that your credit score and your financial health may be correlated, but they are not entirely the same thing. A common mistake that gets consumers into trouble is the assumption that as long as they are maintaining a good credit score, this means that they are in good financial health and they can go out and borrow more... If you know you have a problem keeping credit cards without overspending, this is one area where it is wise to consider whether your focus should be on your credit score or on your spending habits...

You are probably quite skilled at justifying little emergency expenses... If you are not entirely maxed out, congratulations, but pretend that you are.
So that is from Don't Screw It Up. You can read my earlier entry on this book by scrolling down a bit. It covers a lot of areas of life from how to get out of a chair the right way, how not to fall down in a bus or the subway, how to have a successful date and how not to look ugly in your vacation photos.

I hope, as you're thinking about how to spend your limited holiday funds you might consider adding one or two of these books to your gift list. If you buy them directly from me (click on the cover of Broke is Beautiful on the right) I will autograph them for you and for a limited time, I'll throw in a copy of my 2000 book Bad Predictions.

While you are shopping, I would also like to encourage you to keep it local. When you buy your gifts from Michigan businesses, the money stays in the local economy. I have put together a list (on my fiction-focused blog) of unique items by Michigan artist including decorations, clothing, jewelry, games, music and books.