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Lansing's Advice Column

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Dear IMO,

My wife and I have been giving a lot of thought to our finances these days. Although our income has stayed the same since the first of this year, spending has gotten a bit out of hand. We seem to think that everything we want, we actually need, and so we buy it. On credit!

When the monthly statement arrives, I am shocked by the number of "things" we have purchased. Most months, we are able to pay off the card, but for the past several month we were unable and were hit with a hefty finance charge. I admit, neither of us is fiscally disciplined, but we are looking for advice. Any suggestions as to how we can solve this dilemma?

Sincerely,

Us

Dear Us,

Your dilemma is a common ailment among most Americans. It is not fatal, but is somewhat contagious, and if left unchecked, can have adverse effects on long term relationships, retirement plans and basic quality of life. You and your wife suffer from credit card elbow.

 

It begins gradually with an occasional purchase and the accompanying swipe of the credit card. You may not have an immediate use for the item you purchased, but the thrill of the moment was too great. Soon, you are on the hunt searching clearance bins, outlets, and large box stores swiping your credit cards over and over again. Soon the house, attic, basement, and shed are filled with items that you simply had to buy.

 

Then, the credit card statement arrives, and the reality of your collective purchases shocks you out of your euphoric state. Your elbow begins to throb, and no matter what you do, nothing makes the hurt go away. Neither aspirin nor analgesic cream helps.

 

But take courage, there is relief and here is the remedy.

 

First, sit down with your wife and your credit cards. Carefully examine the contracts that govern their use. Each of you ought to choose one credit card that offers the lowest fees and best rates on purchases. Place the other cards in a lock box, and pledge that neither of you will take any of those without the other's permission and for a really important reason.

 

Next, sit down and review your purchases over the last 6 months. Ask yourselves this important question: Did we need the item for our daily existence or was it an impulse purchase? Food, water, fuel-these are necessities. A really neat GPS for finding your way to the place where you have worked for the past 16 years is not a necessity. When the items are placed in their appropriate list, determine which ones can be returned and have them credited to your account. This will ease some of the acute pain.

 

The next and final step is one that will require daily attention and proper exercise: establish a budget. Yes, a budget.

 

Calculate your monthly combined income and subtract it from your monthly necessities-food, utilities, fuel, etc. The difference is what you can use to a) pay off the debt you owe, b) put into a savings account for future, responsible use, or c) put some of the monies into savings and spend some on an occasional fun night out or other adventure within the limits of your budget.

 

A little bit of fiscal discipline will go a long way, and slowly, that credit card elbow will begin to show signs of improvement in 3 to 6 months.

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