Don’t Be Afraid of your Financial Situation

By Matt - Thursday, May 8th, 2008

One of the most common reactions to something we don’t understand is fear. It drives us into many of the stupid decisions we make and thoughtless things we say. I know I don’t speak for every person but too often when we don’t understand something and rather than trying to find information we simply react with fear. What does this have to do with personal finance? Everything! As a society we are uneducated in the ways of personal finance, even at the most basic level, and we react spastically when something comes up.

Don’t be afraid of your financial situation. Understand it.

Before you do any more damage that might take years to fix, stop and take a look around you. If your financial situation is healthy and you’re living well below your means then congratulations, you’re in the minority. But if you’re in debt, living paycheck to paycheck, and wondering how you’re going to pay your bills then take a good look. Are you simply reacting to what’s happening around you or do you really know what’s going on?

You’ll probably have to ask yourself a few questions to get a better understanding of where you stand such as:

Am I spending too much money? Why?
Do I know where my money goes?
Do I buy things because I don’t want to admit I can’t afford it?
Do I understand how my credit cards and debt work?
And the list goes on and on.

When I first left university and started working I was making good money which I in turn was spending at an alarming rate. When I ran out of money I simply turned to my credit cards to cover the difference. At first this wasn’t a problem because the credit cards had low limits. But that changed very quickly and before I knew it I was heavily in debt. I was living from paycheck to paycheck and afraid of my finances and how I spend my money.

If at that time I had stopped and understood more I would be in a far better situation today. Not understanding and being afraid of your financial situation can mean that you’ll continue to spend money when you shouldn’t (or don’t have it) to keep appearances up because you don’t want to admit being in debt.

Educate yourself! Understand the consequences of your actions and take some responsibility for them. That doesn’t mean you need to stop all of the fun things in your life that cost you money but you might want to consciously cut back to get a grip of your financial situation rather than reacting because you’re afraid of your financial situation.

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This entry is filed under Financial Situation.

4 Responses to “Don’t Be Afraid of your Financial Situation”

1 Will says:

May 8th, 2008
at 9:14 am

Many people don’t want to face their financial situation out of fear of what they’ll actually see when it’s all said and done. After all, it’s easier to tell oneself that you’re a few thousand dollars in debt than looking at, say, $8,537, which is something else entirely

2 Matt says:

May 9th, 2008
at 5:53 am

Thats very true Will. But the problem isn’t necessarily not wanting to face that debt its keeping your day to day spending as if you had no debt which causes the problem.

3 Msminiducky says:

May 12th, 2008
at 2:12 pm

Funny, I had this uncharacteristic reaction to having to sell my truck because I didn’t think I knew enough about how to do it. That’s cost me at least two or three car payments in addition to however much I’m not going to be able to sell it for while the market and economy continue to soften.