Surveys have shown time and again that people tend to fudge the truth when they talk to others about their money. White lies, mis truths and omissions range from not telling your spouse about the new pair of shoes or tech toy you recently purchased, to not mentioning to your fianc’e about the recent bankruptcy filing you had to make.
Of all the money lies we tell, some of the most destructive are the lies we tell ourselves. What is the danger in this? The danger comes from the fact that we may actually believe these fibs we tell to ourselves. Although it may seem paradoxical to those looking in from the outside (seriously, how can you effectively lie to yourself when you’d have to know the actual truth in order to deceive yourself?), that is exactly what many of us attempt to do. A large number of these financial lies are nothing more than justifications for behavior that we know, deep down, is not healthy for our finances. Here are some of the financial lies you may be telling yourself:
I Deserve It: This entitlement mentality is an easy way for us to justify to ourselves a purchase that is impulsive, outside our budget or even extravagant. “I’ve worked hard, right? I’ve deprived myself of other things, right? You only live once, and I’m going to live right now.”
There is no denying that life shouldn’t be all drudgery, and even the tightest budget must allow for small pleasures and splurges. However, you are setting yourself up for big trouble if every expenditure becomes acceptable because you think you should be rewarded.
“I’ll Feel Better If I Buy it?”: Sure, you may feel better temporarily, but that good feeling works like the reaction to an addictive drug. It only fills the hole for a short period of time before you crave something bigger and better to replace it. You can never achieve true satisfaction by trying to purchase it and thus will use the same justification on the next purchase, and the next, and the next…
They Wouldn’t Have Sent Me That Credit Card If My Credit Wasn’t Good: While in years past it was true that the credit card issuers only sent solicitations to people with good credit, that is definitely not the case today. These days, practically anyone with a home address receives “pre-approved” offers. Even a recent bankruptcy doesn’t bar you from getting plasticized all over again. In fact, credit card marketers specifically target individuals who they predict will have trouble paying their bills. Why? Because the late fees, finance charges, and over limit fees provide substantial revenue for credit card issuers.
If you know you can’t manage your credit well, don’t get a card just because it is offered to you. And remember that “pre-approved” is a misnomer; anytime you apply for credit, your credit record will be accessed and reviewed. Too many applications and your credit score may actually decrease.
The Bank Wouldn’t Have Given Me A Big Mortgage If They Didn’t Think I Could Afford It: This logic here is similar to the logic of “They Wouldn’t Have Sent Me That Credit Card If My Credit Wasn’t Good.” Just because somebody offers you candy, doesn’t mean it’s good for you and that you should gobble it up. Only you can determine whether a monthly mortgage payment will fit your budget and whether you can afford the house you are purchasing.
I Got A Good Deal Because It Was On Sale: Really? Sure, that dress or computer gadget was marked down, but you have to remember that you’re not necessarily saving money by spending money, especially if you would have never purchased the product had it not been on sale. How about those “buy-one-get-one-free” deals? Check the prices. Supermarkets are particularly tricky shopping territories. Sometimes they showcase items with a “sale” price that is actually higher than the usual price. While the above statement can be true in certain circumstances, it can also be false and just because something is on sale is not enough justification to make the purchase.
I Can Worry About How To Pay For It Later: Uh oh. This is the slippery slope of credit that can lead to disaster. If you can’t pay for it in cash now, and you don’t know how you’ll come up with the funds later, you are heading for expensive debt troubles. “Later” has a way of arriving sooner than you expect.
If I Can Pay The Minimum Payment On My Credit Cards, I’m OK: True, it’s better to pay a small amount than to pay nothing at all, but the amount of the minimum payment is usually structured so that you pay only a fraction of the actually debt with most of it going toward interest. This means that you could wind up spending many years paying back the original amount plus interest that grows exponentially.
If I file For Bankruptcy, It Will Solve All My Money Problems: Nope. Certain debts cannot be discharged in bankruptcy, such as tax liens, child support, and government-funded student loans. While a bankruptcy notation will be removed from your credit report in ten years’ time, potential employers may ask if you have “ever” filed. That factor may count against you in the job-seeking world and elsewhere.
If I Don’t Open My Bills, They Don’t Exist: Ostriches can hide their heads in the sand, but it won’t do you any good to try the same tactic. If you’re having trouble paying your bills, call your creditors as soon as possible. Many will be willing to work with you to make alternative payment terms if you come clean quickly. The longer you ignore bills and phone calls, the less sympathetic your creditors will be.
Everything Will Work Itself Out: Maybe it will, but it’s unlikely without a plan. You can’t count on a lottery win or even an inheritance to solve all your money problems. Even getting a big income tax refund is not the answer to your prayers. If you had too much tax withheld during the year, it’s a bad sign if you’re financially slipping and sliding for months until you get the refund.
Sure, a positive attitude is one of the keys to success in life, no matter how you define “success.” However, you can’t count on your financial dreams to magically come true. You need a plan of attack to face your problems and to reach your goals. It may be helpful to enlist the aid of a trained credit counselor or other financial professional. Just don’t tell those financial lies to yourself anymore.
By pfadvice contributing writer Valerie S. Johnson