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

Recently, I found this video of a talk done back in 2001 at the TED Convention by John Wooden, a former coach for UCLA.  The topic of his speech is Defining True Success.  In this 17 minute video, Mr. Wooden gives wisdom that is timeless and can be applied to any facet of life including, finding success financially, in a career, as a spouse, as a parent, etc.

Since we talk about personal finance here, I’ll take a few quotes of his quotes and relate them to personal finance.  Check this out:

“My own definition of success:  peace of mind attained only through self-satisfaction in knowing you made the effort to do the best of which you are capable.  If you make the effort to the best of which you’re capable, try and improve the situation that exists for you – That’s Success. “

Succeeding at managing money is all about achievement on a personal level.  Not everyone is going to be able to attain multi-millionaire status.  Not everyone is going to have hundreds of thousands of dollars in the bank.  But with effort each person can achieve their personal best financially without being compared to others.

“I came up with a pyramid eventually …And right at the top -  “faith and patience”. Whatever you are doing, you must be patient.  You have to have patience.  We sometimes think that change is progress, but forget that there is no progress without change.  We must also believe, truly believe.  Not just give it word service, but believe that things will work out as they should, PROVIDING we do what we should.  I think our tendency is to hope that things will turn out the way we want them to, but we don’t do the things necessary to make those things become reality.”

I can definitely relate to this quote.  As my husband and I were paying off what we felt was an enormous amount of debt, what kept us going was faith and patience.  Faith that one day we would achieve our goal of debt freedom.  And patience to do the daily monthly tasks required to continue on the lengthy journey and achieve the goal.   

“Reminds me of another set of three’s that my dad tried to get across to us.  Don’t whine.  Don’t complain.  Don’t make excuses.  Just get out there, and whatever you are doing, do it to the best of your ability.  Never mention winning.  My idea is that you can lose when you outscore somebody in a game.  And you can win when you are outscored.  Just be able to hold your head up after a game.  When the game is over and you see somebody that didn’t know the outcome, I hope they couldn’t tell by your actions whether you outscored an opponent or the opponent outscored you.”

Sometimes we think that the grass is always greener on the other side so we whine, we complain and we make excuses about our present situations.  But the reality is that we should be thankful in all things.  Keep a smile at all times.  I know it hard when times are tough, but in order to get to the mountaintop, you have to go through the valley.  It’s just the cycle of life.

“Then I ran across this simple verse that said, “At God’s footstool to confess, a pour soul knelt and bowed his head.  “I failed!” he cried.  The Master said, “Thou didst thou best, that is success.”

This is my most favorite quote from the entire video.  If you do your best, that is success.  What else can I say?

There’s a lot more to be gleamed from this video, but I decided to give my most favorite parts.  In the end, the talk is meant to inspire all of us to succeed on our own personal level.  Not just going with the flow of life, but to put in some effort and try to do our own personal best. 

If you haven’t already, take a moment to watch the video.  You will definitely be inspired.  Please share your views about the video in the comments.  

If you’ve never heard of TED, it’s a small non-profit devoted to ideas worth spreading:  Technology, Entertainment and Design.  The annual conferences in Long Beach and Oxford bring together the world’s most fascinating thinkers and doers who are challenged to give the talk of their lives (in 18 minutes).  You may visit TED.com by clicking on this link.