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  • Financial Behavior

    Over the past few year or so, I've been itching to buy new computer parts. Does my computer do exactly what I want/need? Yes. Yet I still have a craving for what's new. I've become quite good at telling myself no when it comes to unnecessary items, so every time I feel the urge to click purchase I just tell myself no. What I'd like to be able to change is the urge itself, as well as the feeling of crap I get once I tell myself no and my brain realizes that I'm not going to get that new shiny computer hardware hotness that amazon has magically shown me. I should also say that at our resident's pay, we really can't afford to spend money on things we don't budget for, and while I continually save up for big purchases like this, the months in between tend to be Debbie Downers because of this urge.

    Have any of you experienced "correcting" your behavior so that you don't crave what you once used to? What methods did you use? Was there trial and error?

  • #2
    Behavioral finance is a huge topic in our industry right now. There is some really good research on financial behavior, most notably by the father-son team of Ted and Brad Klontz, who happen to be from Nashville, not too far from me. I was able to sit in on a session with Ted in my recent Nashville conference and he is really good.  They've written some good books on the topic if you'd like some recommendations beyond others' experiences. Let me know or ask Google.
    Our passion is protecting clients and others from predatory advisors. Fox & Co CPAs, Fox & Co Wealth Mgmt. 270-247-6087

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    • #3
      Thanks Johanna. I'll definitely have a peek and the Klontz' research (is that correct? or is it Klontz's?, silly s/z sounds). If you happen to think there is a notable book that would be in most public libraries, I'd love to know. As a complete tangent, you happen to be a little less than 2 hours from where I grew up. Hard to believe that I now miss the back roads of Nowhere, Western KY

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      • #4




        Thanks Johanna. I’ll definitely have a peek and the Klontz’ research (is that correct? or is it Klontz’s?, silly s/z sounds). If you happen to think there is a notable book that would be in most public libraries, I’d love to know. As a complete tangent, you happen to be a little less than 2 hours from where I grew up. Hard to believe that I now miss the back roads of Nowhere, Western KY
        Click to expand...


        Look for:

        The Financial Wisdom of Ebeneezer Scrooge by Brad & Ted Klontz, Rich Kahler (he's a great FA and a speaker and author in his own right)

        Mind Over Money by Brad & Ted Klontz

        Also recommended by Dr. Klontz:

        Your Money and Your Brain by WSJ reporter Jason Zweig

        along with alternate perspective on investing:

        The Myth of the Rational Market (not exactly what you asked about but thought I'd throw that in since he mentioned it)
        Our passion is protecting clients and others from predatory advisors. Fox & Co CPAs, Fox & Co Wealth Mgmt. 270-247-6087

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        • #5
          The good news is once you're an attending, money won't be so tight. What seem like big ticket items now are not once at attending level income.

          I buy some "expensive things" - but it does not derail us at all. I bought a new powerbook earlier this year. I bought myself a chanel bag for my 40th bday, an apple watch last month - not necessarily "budgeted" for ....

          Obviously depends a bit on your other finances too (COL, specialty etc).

           

           

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          • #6


            Hard to believe that I now miss the back roads of Nowhere, Western KY
            Click to expand...


            Forgot to comment on that - I had no idea that Nowhere, KY even existed! There's got to be a good story there. Do you ever have a reason to visit? It would be cool if you could stop by Mayfield!
            Our passion is protecting clients and others from predatory advisors. Fox & Co CPAs, Fox & Co Wealth Mgmt. 270-247-6087

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            • #7
              Hypnosis is your best bet    I've found it makes sense to identify those things you want to "splurge" on and have a separate pot of money for them.  This pot shouldn't jeopardize your main financial goals though.  The longer people put off buying those things the more likely they are to go wild and buy a bunch of things instead of just one or two items.

               

              You could always disconnect your Amazon from your bank and any other automatic payment connections you have established. Adding that extra step to have to write a check to buy an item gives you some time to decide how badly you really want that item.

               

              Richard Thaler just won a Nobel on behavioral finance.  Grab some of his books from the library, NOT Amazon!  And be sure to read the articles here on WCI about lifestyle creep.

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              • #8


                I bought myself a chanel bag for my 40th bday,
                Click to expand...


                You better be careful.  I know what those cost!

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                • #9




                  Over the past few year or so, I’ve been itching to buy new computer parts. Does my computer do exactly what I want/need? Yes. Yet I still have a craving for what’s new. I’ve become quite good at telling myself no when it comes to unnecessary items, so every time I feel the urge to click purchase I just tell myself no. What I’d like to be able to change is the urge itself, as well as the feeling of crap I get once I tell myself no and my brain realizes that I’m not going to get that new shiny computer hardware hotness that amazon has magically shown me. I should also say that at our resident’s pay, we really can’t afford to spend money on things we don’t budget for, and while I continually save up for big purchases like this, the months in between tend to be Debbie Downers because of this urge.

                  Have any of you experienced “correcting” your behavior so that you don’t crave what you once used to? What methods did you use? Was there trial and error?
                  Click to expand...


                  You're going to love what financial independence does for your ability to spend money without feeling bad about it. There's light at the end of this tunnel. The key is to be making progress toward your financial goals without ever feeling like you're depriving yourself. I think the secret to that is to grow SLOWLY into your attending income.
                  Helping those who wear the white coat get a fair shake on Wall Street since 2011

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                  • #10
                    I believe self control in all aspects of life is one of the most valuable skills/behaviors to learn/practice.  Simply becoming aware of one's behavior can help to control it.  This is one of the key teachings in mindfulness meditation.  Being aware of your emotions and how they affect your behavior can weaken those emotional urges to spend.  It's something I still struggle with, but I'm certainly light years better than I used to be.  I'm doing pretty good with the spending  urges these days, but still could do a lot better.  If I could only get control of my eating habits too!

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                    • #11




                      The good news is once you’re an attending, money won’t be so tight. What seem like big ticket items now are not once at attending level income
                      Click to expand...


                      That seems like such a long time from now! A conservative guess would say about 8 years. Our "Chanel" item is actually Burberry. My wife is going to be buying one of their trench coats once we reach attending-hood and I give her the thumbs up lol




                      Do you ever have a reason to visit?
                      Click to expand...


                      My folks still live in the same house, so I get to visit occasionally. We're moving overseas in about 6 weeks, so that will come to a stop haha. I once was in Mayfield about 15 or years ago for a junior golf tournament though!




                      I’ve found it makes sense to identify those things you want to “splurge” on and have a separate pot of money for them.
                      Click to expand...


                      That's what we've been doing. We use YNAB and have a personal spending section. Unfortunately, at our current income level, it would take about 2 years or so to save up for what I want. I don't fancy having 2 years worth of urges to spend money and the subsequent bad feelings. I also don't think I have the willpower to not spend any money on myself at all for 2 years in order to reach that goal Hypnosis would be great haha. I suggest taking a look at Derren Brown. That's some talent and excellent preparation and presentation!

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                      • #12
                        I should add that the reason we can do this is because all our retirement and other savings are automated. So there is no temptation to pull/divert funds from there.

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                        • #13
                          Hatton1 - I got the entry level bag. Not even a real bag technically. It's the wallet on chain. Basically a mini purse.

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                          • #14
                            I always found distraction to be the best way to defer these spending thoughts. Find something you are interested in that can take your mind off the subject. Trying not to think about something is a sure way to spend all your time thinking about whatever it is you are avoiding.

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                            • #15


                              Hatton1 – I got the entry level bag. Not even a real bag technically. It’s the wallet on chain. Basically a mini purse.
                              Click to expand...


                              I have a great Chanel knock off with the braided chain shoulder strap that I got in Florence Italy.  People assume it is real because I am a doctor. HaHa.

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