How to Stop Making Bad Decisions

I saw the funniest sign recently. But it wasn’t funny for long because I started to think about it. Suddenly the humor melted away.

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Ouch! Those 15 words hit hard. I’ve made my share of bad money decisions in my life. 

I’ve come a long way from that dark season of my life. I am determined to not go back, but also to not live with regret for what might have been. Instead of living with my eyes on the rearview mirror, I want to stay focused on the present with eyes toward the future. Which begs the question: How can we stop making bad decisions when it comes to money and personal finance?

Get smart. Despite the fact that research from the University of British Columbia released in November 2013 found the smallest part of the human brain is integral in the decision-making process—and the fact that we do seem to repeat our mistakes—it is possible to become a better decision-maker. With practice, awareness and a bit tender loving care for yourself, you can learn to make better choices. I’ve had lots of feedback from readers of this column who tell me that over the years, they feel as though they have gained the equivalent of a degree in personal finance—one random 500-word column at a time.

Your TV May be Watching YOU

I took a little heat the day my son walked in and noticed the tiniest piece of Gorilla Tape I’d strategically stuck over the built-in camera on my MacBook Pro. “Paranoid much, Mom?”

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Ever since I’d read a news story about how identity thieves are hacking into webcams and computers to do their dirty work, that tiny dot-sized camera had become a giant eye staring at me and it was giving me the creeps.

I figured some do-it-yourself pre-emptive action on my part couldn’t hurt, if only to give me some peace of mind. It worked.

I didn’t think much about it again until I watched my friend and cybercrime expert, Bob Sullivan, on TODAY discussing Samsung Smart TVs. It seems that these Smart TVs that come with voice control (also known as voice recognition) are super smart with an interactive feature that allows its owner to use many of its features with voice commands. Simply put, you talk to the remote control instead of fiddling to figure out which buttons to press. 

Samsung SmartTV is listening all the time, too. It not only collects what you say into its remote control—Samsung uploads and stores everything Smart TVs hear from the room  without encrypting it. You can read about it in Samsung’s privacy policies

“That means anyone who can insert themselves between your TV and Samsung’s collection devices and its partners can hear what you say on your couch. Not a surprise,” said Bob. “New gadgets always arrive with features first, security second.  Watch this pattern play out again and again as The Internet of Creepy Things invades our home.”

Samsung is not alone.

When Frugality is Not Fun

I was not born frugal. Everything in me wants to spend, acquire, achieve and amass. I am drawn to luxury. I live with visions of grandeur and opulence. My fondest dreams include custom tailored clothing, domestic staffs, $600 silk bed sheets, manicured gardensDooney & Bourke All-Weather Leather, fabulous cars, limousines and private jets.  That’s just how I am.

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For me, practicing frugality is not really fun. Oh, there’s an occasional situation from time to time when scrimping might be slightly amusing but on the fun meter of life, planning and budgeting, paring down, doing without when it seems that everyone else in the world is prospering beyond belief—none of that can hold a candle to carefree shopping, living and spending as if money were no object.

My dilemma is that I do not have the means to indulge in a life-style equal to my natural-born tendencies. Those of you familiar with my story know that my feeble attempts to play out my natural tendencies landed me in a lot of trouble. I took the treacherous path of incurring debt to acquire things I couldn’t afford. I learned firsthand that living under mountains of debt is not living … it feels like dying.

So if living naturally brings pain but living frugally isn’t fun, is there any hope for the unnatural frugal type? Yes! It requires new behaviors. Voluntarily.

Insurance Coverage You Absolutely Don’t Need

Some kinds of insurance are necessary. The following, however, may not only be unnecessary but downright ridiculous.

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ACCIDENTAL DEATH INSURANCE. Why pay extra for this kind of insurance? Statistically, it is highly unlikely you will die in an accident and even if you do the basic life insurance you carry should be sufficient.

CHILD LIFE INSURANCE. Life insurance should be carried only to the extent that others depend upon the income of the insured, whose early demise will leave those people financially destitute. Children don’t fall into this category unless, of course, your kid is Griffin Gluck. Insuring the lives of children is unnecessary and does not guarantee insurability when the child reaches adulthood as some agents would like you to believe. Actuarially speaking, the chances that your child will die in childhood, leaving you with big burial costs are so small, they’re barely worth talking about and a risk parents should agree to self-insure

TRAVEL INSURANCE. Never purchase this kind of insurance before taking a trip. If in the unlikely event the plane crashes or ship sinks, your family is going to sue. This kind of last minute insurance is costly and a major rip-off. Ditto for trip cancellation insurance.

Beat the Clutter Improve Your Life

Getting organized is like dieting. Everyone knows how to do it. The problem is getting around to it and then maintaining the results.

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A few years ago, when we remodeled our kitchen I emptied every cupboard and drawer. When it was time to put everything back, I decided to put things away as I used them. I quickly realized why it was such a problem to keep the kitchen neat and tidy. We had too much stuff we never used. Getting rid of the unused left so much space to organize the essentials.

Face it. If you don’t have enough closet, drawer and storage space to comfortably handle your possessions, you probably own to many things. Give away, pare down let your rooms closets and drawers appear serene and controlled–kept.

There’s no single “right” way to organize your possessions and home. Organization must fit your style, your energy and your schedule. Find a system that functions best for you and your family.

No matter the way you do it, let this be your mantra: Eliminate and concentrate.

Weird Ways to Earn Money on the Side

Recently, while brainstorming with a reader who needed to supplement her regular full-time job, I made a quick list of the ways I’ve done that in my life. I wanted to help her discover what she does well that others might pay her to do for them. 

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PROCESS SERVER. I worked as an independent process server for a company that attorneys hire to have subpoenas delivered in their civil cases. Whenever I had a couple of hours to spare, I’d pop into the office, pick up a stack of subpoenas and head out to attempt to “serve” unsuspecting defendants in civil law suits.

My mission was to locate the defendant then address said person by name (Laura … Laura Smith?). By law, I was required to make sure I had eye contact, wait for that look of “knowing” and then hand off the document. Even if the person refused it, turning to walk (run?), I could legally assert that I had completed the mission.

The best part? I got paid $35 per attempt to serve. That means if I knocked on the door and no one was home, attempt complete and back into the stack that document would go for a future attempt. I could easily “attempt to serve” two or three subpoena’s per hour. The attorney service company I worked for loved me because I was available at odd times, like late at night or early on a Saturday.

Process servers are legally required to serve papers in the correct manner laid out by their state. Process serving laws differ by state. But basically, if you are an adult, have not been convicted of a crime and can engage strangers in a warm and friendly way, you too could be a process server in your spare time.

PIANO TEACHER. I got started young at age 15 as a student teacher in a music academy. I loved it—not so much the teaching, but the $5 per lesson. My little students did well and soon I was teaching on my own, at home after school. Teaching private piano lessons was the way I paid my way through college. At one point I had 72 students, giving each one a 30-minute lesson per week.

Three Tricks to Resist Emotional Spending

I discovered money was a great antidepressant years ago I spent to change my mood, to reward myself and to make myself feel better after a stressful week.

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I spent money when I felt sad and when I felt glad. I spent to get approval, to make my kids more popular, to impress people I didn’t even know. The list goes on and on.

Who hasn’t indulged in retail therapy? Case in point: the 48 pairs of shoes in your closet, of which only three pairs are comfortable enough to actually wear. But emotional spending is nearly always a mistake. The adrenaline rush lasts about as long as it takes to walk to the car. The feelings of guilt and remorse set in soon, sending your emotions on yet another wild ride. “Retail therapy” isn’t too soothing in the long run.

Making money decisions based on how you’re feeling at any given moment is a financially dangerous way to live. It took me a long time to understand how to manage money in ways that didn’t change with the wind. Once I got this through my head, I stopped assigning money the job of making me happy.

What Do You Need to Be Happy?

When a University of Michigan survey asked people what they believed would improve their quality of life the answer given most often was, “More money.”

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In their book The Day America Told the Truth, James Patterson and Peter Kim asked, “If you could change one thing about your life what would it be?” The number one response at 64 percent was, “Greater wealth.”

A University of Southern California study found that greater wealth didn’t translate into greater happiness for many of the 1,500 people surveyed annually over three decades. USC economist Richard Easterlin said, “Many people are under the illusion that the more money we make, the happier we’ll be,” but, according to the study, that isn’t true.

We know from other well-respected studies that fewer Americans are “very happy” today than in the 1950s despite having far more money, bigger homes and more stuff. In 1950 there were 3,000 shopping malls in this country, by 2000 there were 45,025. We have more money, we have more stuff but clearly, greater affluence has not translated to greater happiness.