Your Money_ The Missing Manual - J. D. Roth [17]
Find out exactly how much the item costs.
Designate an envelope for saving the money, and write your target sum on the outside.
Find a picture of the item in a magazine or online, or take the photo yourself.
Fasten the picture to the envelope.
Commit to a definite schedule for adding money to the envelope—$10 a week, say, or $50 every paycheck. Write that commitment on the envelope, too.
Feed the envelope according to your schedule.
Each time you add money to the envelope, you'll see the picture of the item you want, setting up a positive feedback loop that feeds your desire. To supercharge this technique, Brem suggests Photoshoping a picture of yourself with the thing you're saving for so that it reinforces the positive buzz. (You can also use this method with targeted savings accounts, which are described on Targeted Savings Accounts.)
Coping with Mistakes and Setbacks
It's unlikely you'll achieve all your goals without encountering setbacks or making mistakes. When you get sidetracked from your goals, it's easy to get discouraged. You can waste a lot of time reacting to problems—bounced checks, emergency car repairs, and so on. The best way to deal with financial setbacks is to prepare for them.
There are two main ways to lessen the impact of setbacks. You can do both of these before disaster strikes:
Educate yourself. The more you know, the better you can anticipate problems. Read personal-finance books, magazines, and blogs. Most importantly, talk to the people you know who have control of their finances; they'll probably be happy to offer advice.
Tip
For more recommended sources of financial info, head to this book's Missing CD page at www.missingmanuals.com.
Be prepared. Start an emergency fund (Establish an Emergency Fund). Setting aside $500–$1,000 in savings is cheap insurance. If you have a cash cushion, your financial plans can't be derailed by a single mistake or crisis (unless it's big). Your emergency fund can grow as you become more financially stable.
Even if you're prepared and educated, you're still going to make mistakes now and then, so you need to know how to pick up the pieces after things fall apart. Here are some strategies for minimizing the damage:
Don't panic. When you suffer a setback or realize you've made a mistake, try to relax and do not freak out. Take an hour or two to distract yourself. Better yet, sleep on the problem—it's amazing how a little time can provide some perspective.
Believe in yourself. Though you may not know exactly how to solve the problem at hand, trust that you'll find a solution. Stay positive, solve the problem, and learn from the experience.
If possible, undo it. You can reverse some mistakes. Say you just blew a bunch of money on new clothes or are feeling buyer's remorse over your new Nintendo Wii. Return the items, if you can. If that's not an option, sell them to recoup some of your loss.
Evaluate your options. Some mistakes and setbacks aren't reversible: If a little old lady runs a red light and totals your car, there's no undoing the damage. So make the best of the situation: Create a list of your options, keeping your long-term goals in mind. This will help you avoid making rash decisions.
Don't let it get you down. When things go wrong, it can be tempting to ease the pain by spending more money. But compulsive spending (Curbing Compulsive Spending) just makes it harder to reach your goals, which will make you feel worse, not better. So fight the urge to practice "retail therapy." Don't let one problem snowball into two or three.
Learn from your mistakes. Figure out where you went wrong. How did that traveling salesman sell you those overpriced steak knives? What can you do in the future to avoid doing the same thing again? This is a fine line to walk: You don't want to beat yourself up, but you don't want to keep making the same mistakes,