If there’s one thing that many of us take pleasure in doing, it’s pointing out other’s failings and short-comings.
But another thing is also true, and that’s the fact that it is sometimes hard to “face the music” in our own lives.
One of the things I have enjoyed doing in my spare time is studying people, especially those in trucking or logistics, that have done very well financially. In preparing for some of our IRS cases, I likewise find it helpful to study situations in which a family or business has experienced severe financial misfortunes.
This past Friday, yours truly hit the big “6-0”! It’s not like it snuck up on me, though. I had expected that, God willing, this day would eventually come. (I’ve been telling myself that new phrase, “80 is the new 60”!)
It seems that birthdays that end in “0” tend to be particularly good times to pause for introspection, both financial and otherwise.
(By the way, well-timed, forward looking, and backward-looking analysis are two of the keystones of sound and productive tax planning and tax-cutting strategies. These will play a big role in my emails as we close in towards year-end.
After all, when January 1, 2015 arrives, a lot of what we can do towards IRS damage-control is historical in nature. Right now, we can take BIG steps towards cutting your taxes!)
Let's start here, though:
Dennis Bridges' "Real World" Personal Strategy Note Confronting Our Financial Mis-steps
Working with my clients' finances over the years has given me a bit of a crash course in human behavior. Often, I'm floored by the generosity I see displayed by many professional drivers -- even those without significant means.
Other times ... well, I think that we all could use the reminder that our human flaws show up very clearly in our family's finances. The fact is that we ALL tend to color the truth, from time to time, about what's really happening in our wallets.
This habit of distorting reality threatens our financial stability. Instead of spending $10 for lunch, we spend $30. Instead of recognizing that we “want” that new shirt, a new truck, or fine dinner at a restaurant, we lie to ourselves until we are convinced that we “need” that new shirt, new truck, or fine dinner. The credit crunch of 2008-09 can partly be blamed on a nation full of people who convinced themselves that a $500,000 home was necessary -- even though a $250,000 home was more than sufficient. We need to learn to live within our means ... and this sometimes means that we must put the brakes on our excess spending.
So, I've compiled a short list of ideas on how to stop deceiving ourselves, and to instead face the truth when making purchase decisions.
1. Have (and stick to) a budget. Is this purchase in my budget? For example, your family budgets a certain amount each month to spend on clothing. You've agreed that this amount is sufficient to meet your needs. So you set this amount before facing a purchase decision. If during the month you want to exceed the budget because Kohl's is having a fantastic sale, then you must make up for it somewhere else. You aren't saving money by exceeding your budget during a sale. In fact, now you have to dip into savings to pay for your overspending.
2. Set a per-purchase spending limit. A wise man said, "The four most caring words for those we love are, 'We don’t need it.'" Take some time with your spouse to set what I call a "What I can spend without having to ask my spouse if it's okay" spending limit. Some spouses have decided that neither one of them is allowed to spend more than $100 at any given time without calling and asking the other one if it's okay (this does not apply to groceries). Let me tell you right now, these limits have stopped tons of people from making a lot of unnecessary purchases.
3. Replace bad habits with enjoyable, inexpensive activities. Shopping or overspending is a habit that we have likely formed over a number of years. Since our brains are programmed to react in a certain way in specific situations, any change is met by resistance. The existing habit is simply more comfortable and natural. To help change your behavior, replace the bad habit with another activity.
For example, instead of going to the mall to pass time, go to a local park with a soccer ball and spend some time with family or friends. Start or re-start a hobby. Your new hobby might even be a low-cost home business where you actually can make money!
4. Make sure that the reason you tell yourself you are making the purchase and the “actual” reason you are making the purchase are the same. Ask yourself, "Why am I really making this purchase?" Am I buying this dress for my wife because I love her and want to show my appreciation, or am I trying to prove to her and the world that I am a good provider? We sometimes cover our true motives in order to justify a purchase. If the real reason you are making a purchase isn't in line with your principles and budget, then don't buy it.
If you are an owner-operator, or own a trucking-related business, seek the guidance and counsel of a non-competitive friend whose business advice you respect.
5. Take stock of, and enjoy, everything that you already have! Develop a sense of gratitude for what you already have in your life. Purchasing new things is often a sign of ingratitude for what life has already afforded us ... or a sign that we feel deficient in some area.
Overcoming bad habits and addictions is a process that requires concerted effort. Face each day one at a time, and stop lying to yourself! Don't believe the story you've created in your mind that justifies unnecessary and financially harmful purchases.
Dennis Bridges is a CPA and recognized leader in tax issues for logistics professionals and logistics-based enterprises. He is the author of The Truckers Tax Relief Toolkit, and co-author of best-seller, Breaking the Tax Code, 2nd Ed.
In honor of the sacrificial work effort expended by drivers and other logistics professionals, he has created the “Truckers Million Dollars Tax Cut”, a nationwide initiative to save over $1 million in income taxes for at least 2,014 truck drivers and others. He welcomes inquiries from individual drivers and others for tax preparation.
Business-wise, he is driven by the desire to bring the maximum value to every client relationship, whether income is measured in six figures or nine figures. He is best known for reaching innovative solutions to tax and business problems.
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