Friday, July 24, 2009

Let Your Values Guide Your Spending Decisions

Like millions of others, I was dumbstruck when I heard Susan Boyle, the dowdy spinster who belted out a tune that moved an entire audience and a panel of judges to silent awe. Likewise, as Kevin Skinner, former chicken catcher, crooned like Garth Brooks, I looked on in wonder. The Susan Boyles and the Kevin Skinners are poignant, even painful reminders of just how untrustworthy our perceptions can be.

Our eyes and ears and noses make sensory perception inevitable. When we perceive something with our senses, our brains become little factories that shuffle our perceptions through an assembly line of our experiences and expectations. The problem is when we let our perceptions go unchecked.

Consider how perception so often influences our financial decisions. We naturally observe those around us, and in so doing, assume many things. We presume, for example, that our neighbor must have gone into hock in order to buy that new boat. This presumption is based on what we think we know: he is making "x" amount a month, he has a mortgage like ours, and he couldn't possibly have had the cash for the boat.

Though we think we can ballpark our neighbor's salary, we really have no idea how much he takes home. Similarly, we don't know what his savings patterns are like or if he plunked down a huge down payment on his house. He may have been saving for that boat for the last five years. What we don't know, however, often guides our own spending decisions. "If he can afford that boat on his salary and with his mortgage, then why can't I go ahead and book that trip to the Caribbean?" we reason.

Not only do we often misperceive others, but we also worry that others will misperceive us. That's why we overspend on a wedding gift for an old college friend or agree to eat out at the pricey restaurant when we really can't afford to. We certainly don't want to look cheap, and we may even want to give the impression that our spending habits are congruent with our level of financial success. In other words, if we spend big, then others will think we're successful.

It's not difficult to see the danger in giving our perceptions this much power. What can be difficult is finding our way through the countless messages that say, "This is what makes you sexy, successful, powerful, or intelligent." Though we can't keep our eyes from seeing or our ears from hearing, what we can do is use our values as our guide to making wise financial decisions.

What is most important to you? When do you feel most alive? What motivates you? Use your answers to these questions to help you decide where and how to spend your money, not on often misguided or mistaken perceptions.


Wednesday, July 22, 2009

About Us

Stress Free Financial is the official blog for the American Center for Credit Education (ACCE). ACCE is a nonprofit organization that produces, publishes, and distributes financial education programs throughout the US. We work with credit counseling and housing agencies, military, and other various community organizations. We will have distributed over 1 million financial education programs in October 2009. Stress Free Financial is a place to learn financial insights, share your own personal finance success stories, and interact among other Stress Free community members. Feel free to share!

Success Stories

Success Stories are what make our blog go round. Hearing incredible recounts about how somebody else has overcome a financial hurdle can inspire someone else to do the same.

Here's how the Success Stories section works:
Do you have an amazing story about how you overcame a dire financial situation, stuck to your budget and achieved your financial goals, or just got out of a sticky money mess? Then we want to hear your story! Post yours as a comment at the bottom of this post, and we'll choose one each week to feature as a post.

Happy sharing!

Stress Free Fridays

Four years (and a few months) after I landed on the campus of a private university in my rusty, lemon-yellow hatchback, I walked away with a Bachelors degree in English, about $20,000 in student loan debt, and not the foggiest idea of what I was going to do next. Nevertheless, I assumed that I would get a job right away and that the salary I earned would be far more than I had made working as a waitress.

I did land a job shortly after graduation, but then the block cracked in my car on the way to that job, just about the time that my student loan payments were set to begin and just as I was settling into a new apartment. I quickly realized that the salary I was making wouldn't be enough to cover my financial obligations, so I got a part-time job-- waiting tables. My life wasn't at all what I had imagined it would be.

At eighteen, I honestly hadn't given much thought to my future; I just assumed I should head to college following graduation, take out student loans to cover tuition shortfalls, get a degree (any degree), and expect to earn enough money to pay all my bills upon graduation. Neither of my parents had attended college, and my two older sisters were themselves in varying stages of receiving a secondary education. We had all excelled academically, participated in various school and volunteer activities, scored well on the standardized tests, and rode on the notion that there would be substantial scholarships available to help us pay for college.

I'm certain I wasn't (and won't be) the only high school graduate who sent off applications, operating on a hunch that this was the school I wanted to attend and the major I wanted to pursue. Other people choose a college or a degree program because it's expected of them. College is too expensive of a proposition to use your hunches or to follow expectations to make decisions-- the average tuition for a public four-year university was $6,585 in 2008-2009.

So if you're at a crossroads, no matter if you've recently graduated from high school or are considering returning to school later in life, (or if you're coming alongside someone who fits into these categories) I suggest that you carefully consider how you can maximize your education dollars. One way to do this is to take a formal inventory of your aptitudes before you even consider enrolling in college courses.

Yes, you will pay for aptitude testing, but you will be able to validate and confirm your strengths through an objective and unbiased source. You'll be able to differentiate your interests, which typically change over time, from your aptitudes, which are talents and special abilities that come naturally to you and that generally remain stable. At the Johnson O'Conner Research Foundation, for example, you can receive in-person and comprehensive aptitude testing for $600, less than you'll pay for tuition and fees for one class at many colleges.

This kind of testing is not only appropriate for a new high school graduate, but also for working adults who may be considering starting a new career or opening a new business. Even prospective retirees may want to consider aptitude testing, as a means of finding ways to make retirement as successful and productive as possible.

Getting a handle on your aptitudes can help you make more informed work and school decisions and can make it easier to choose how and where you spend your education dollars. If college is ultimately in your future, you can determine if the career you want to pursue will be adequate to help you repay the loans you plan to take out.