A couple of weeks ago, I wrote an article about Standing Your Ground.  I discussed collectors and a few best practices when dealing with them.  At the end of the article, I made the following statement:

I encourage you though to find a way to resolve your debts so that you can build a solid financial house.  A house with holes in a few windows (the bad debts) doesn’t look too appealing. Does it?

Although I used broken windows as an analogy, it’s actually a theory first introduced by James Wilson and George Kelling.  A portion of the theory states:

Consider a building with a few broken windows.  If the windows are not repaired, the tendency is for vandals to break a few more windows.  Eventually, they may even break into the building, and if it’s occupied, perhaps become squatters or light fires inside.

Or consider a sidewalk.  Some litter accumulates.  Soon, more litter accumulates.  Eventually, people even start leaving bags of trash from take-out restaurants there or breaking into cars.

The underlying meaning is that when a window is broken in the neighborhood, it should be fixed immediately.  This more than likely will deter further damage from those that are attracted to vandalize.  Cleaning up the sidewalk every day, prevents others from seeing the need add to the pile.

Now, as I consider it here, I think about broken windows in terms of the financial house most of us are striving to build.  We all have some type of structure we reside in whether it be a single family home, condo, an apartment, etc, right?  Well, when a window is broken, you have to make one of two choices:  fix it or ignore it.

To warn you of potential danger, I’ve created a short list of “windows” to be aware of and offer some encouragement of right action along the way.

• Credit Limits

When you’re trying to get your money train back on the right track, your credit limit is something you might want to keep under your radar.  Why?  There are two reasons: one – to avoid the trap of the “over the limit fee”, two – to help your credit scores.  A high balance greater than or equal to your maximum credit limit does not have a positive affect on your credit scores.  And how does it look to potential lenders?  Not good at all.  Though you may pay your bills on time every month, you’d be considered a high risk.  

• Credit Reports

Since we’ve looked at the credit limits being a broken window, let’s look at the larger picture of the full credit report.  It must be checked.  You have the right to obtain a free copy of your credit report once every twelve months from each major reporting agency: Experian, Equifax and TransUnion by way of www.annualcreditreport.com.  A good idea is to not request them all at once.  Spread the three requests out asking for one every four months checking for accuracy.

Xenophon says, “…but accuracy is everything.”  I couldn’t agree more.  Checking everything from the personal and public information, as well as the credit history.  If anything looks strange, you have a right to request an investigation.  Don’t let the litter accumulate.

• The Mail

This broken window will probably require some time a patience, but it’s repairable nonetheless.  You know that pile of bills you’ve got stuffed over in the corner? Yeah, that one.  It’s time to pull it all out and deal with it.  Yes, the time is now.  Believe me, it’s not going away. 

It’s easy to put it to the side and say, “I don’t have time for this right now.”  But if not now, when?  Small debts become collections, collections become judgments, judgments become garnishments.  A little extreme, but some collections may even lead to jail time (click here to see a recent newspaper article about that).

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The bottom line is this:  Being held hostage to unwanted guests is not going to be an option if you don’t repair your windows quickly.  As stated earlier, this is a short list of ideas (things we may ignore).  You could probably think of some examples from your own situation or someone you may know.  Feel free to write about it in the comments.

 Thank you so much for spending your time here with me today!

Image Cred gregoreosz

Probably the worst part of personal finance is having to handle issues surrounding misrepresentation.  Misrepresentation, as I see it, is being presented information in an unsatisfactory or false manner.  Because some people are so slick and cunning, deceit can come in many different variations. 

There is no specific color, shape, size, or height of dishonest people, but I would like to give you some common actions to look for:

• Rushing you to sign paperwork.  Ever heard this? “Sign here, here, here and here..” 
• Hiding the terms.  Only focusing on payment and not the actual terms of the contract.
• Devaluing disclosures.  Not fully explaining your rights as a consumer if something goes wrong.
• Speaking in terminology you don’t understand.
• Dodging your important questions.

Not paying attention to these critical signs could definitely lead to you becoming their latest victim.  So, how can we have great shopping experiences and protect ourselves at the same time?

Be aware.  You know that old saying, “If it’s too good to be true, then it probably is.”  Do your research and be prepared.  Alan Greenspan says it like this…“An informed borrower is simply less vulnerable to fraud and abuse.”

Ask questions.  Asking questions is a sign of strength, not weakness.  Many times we are embarrassed or afraid to ask for fear of how it will make us look.  But the truth is that we look far worse when we don’t. 

Take the attitude of a student, never be too big to ask questions, never know too much to learn something new.  – Og Mandino

Pay attention to your intuition.  You know that gut feeling that tells you something is not right.

To me, it’s kind of like having an “angel” in one ear and the “devil” in the other.  We want to make the right decision and listen to the right voice, but it’s difficult.  Especially when emotions are involved.

Start by creating your line in the sand moment.  If a salesperson at any time crosses that line…end the conversation.  I don’t care if it’s at the end of a long and outdrawn process.  Your feelings as the buyer must be heard.  It’s your time and your money.  Refuse to let anyone abuse it. 

This is so important.  Feeling empowered is helping people be courageous enough to walk away.  Think about it, walking away initially makes for a lot less pain later.  I’m not saying that you should be hard core, but just know that you should respect and be respected.

The key here is to have a watchful eye.  Don’t be too trusting.  Everyone does not have your best interest at heart.  Many times befriending you and making the sale is the only goal the salesperson has set out to achieve.  Once you’ve been conquered…it’s on to the next victim.

Remember, the goal is for you to come out at the end of the process knowing that you have made a great decision.  Don’t be afraid to say…“This is where I draw the line!”

So, how about you…have you dealt with salespeople that misrepresented products, terms, etc?  How did you deal with them?

This is where I draw the line Image by Eva Blue

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I appreciate you for taking the time to read this article today!  If you can relate, feel free to share your experience.  I’d love to hear from you!

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“We must all suffer from one of two pains:  the pain of discipline or the pain of regret.  The difference is discipline weighs ounces while regret weighs tons.” - Jim Rohn

Money is something that everybody loves, but many don’t know how to control.

All too many homes are filled with the stress of working and trying to make ends meet.  It’s robotic…the money comes in and the money goes out, spending for the needs and wants of today.

There are three types of people that exist:

1.  The Prepared – Somewhere along the way they learned how to manage their money, perhaps a trait taught to them by their parents.  They are savers, givers, and investors.  Their bills are always paid on time.  They always have what they need and make sacrifices for their wants.  They use little to no credit.

2. The Deceived – They think they know how to manage money.  They pay their bills on time.  They manage to save some money each month, give and do some investing.  They always have money for what they need AND for what they want.  They tend to overspend, but their success at managing money is camouflaged by the amount of money they make. They use credit, but are only able to manage it by paying the minimum amount monthly.   The truth is revealed soon after disaster strikes (job loss, illness, injury, etc).

3. The Drifter – They don’t know how to manage money at all.  Paying partial amounts and/or late payments on bills are a way of life.  Something always seems to “show up”.  There is never enough to make it until the next pay day.  Small to no savings.  Not able to adequately prepare for the future.  Overuse credit.

Which characterization do you feel applies more closely to your life?  If you fit in category 2 or 3, would you like to view life through a different set of glasses?

What I believe is the key to changing they way your life unfolds is to…Create New Disciplines.  Discipline is a basic fundamental that often goes overlooked when we take on new tasks that are unfamiliar.  New habits must be created on purpose.

Let’s say that you want to lose about 40 pounds.  You have to create new eating habits along with exercise to start the process.  The weight loss does not happen overnight.  It is a gradual change of mindset first, and then the weight loss follows.  You create new disciplines to reach your goal.

The same is true for managing money.  It is a process of creating new habits that will first change the way you think about money and second the way you manage it.  Many of us want to be prosperous, comfortable and/or wealthy, but continue to walk slowly towards financial disaster.

So, how do you create new financial disciplines?

1. Readjust your priorities.
2. Create monthly budgets.
3. Take the time to review your spending daily (5-10min).
4. Start where you are.

Success at money management is not going to happen overnight, but a decision can be made to create new financial disciplines today.

Will you suffer from the pain of discipline or the pain of regret?