How to change financial bad habits in 8 steps

This time of year, adviceon how to shape up financially starts flying like snowflakes in a blizzard: Quit buying that daily Starbucks. Save money.Live within your means.

But making lasting changes is easier said than done, experts say. Replacingingrained, financially unhealthy habits with sound new ones requires time,discipline and a dive into the psyche to figure out why, exactly, you handlemoney the way you do.

Psychologist G. AlanMarlatt refers to it as retraining the brain. "You have to look at habits aslearned behaviors," says Marlatt, director of the Addictive Behaviors ResearchCenter at the University of Washington in Seattle. "Bad habits are learned," hesays, "and they can be changed."

Below, Marlatt and otherexperts discuss eigtht ways to retrain your brain into healthy financial habits.

1. Figure out yourtriggers. Foul moods and feelings of being out of control can set off badhabits, such as overspending. Judy Belmont calls it the paradox of control:Spending might lend a temporary feeling of control, but in reality, it'sirrational. Belmont, a psychotherapist and life-skills educator in Allentown,Pa., compares such behavior to screaming during an argument. "They thinkthey're in control, but they're not," she says.

To reveal triggers, keep afinancial journal for three months, recording each purchase, including when andwhy it was made, says Buffalo-based author Cathi Brese Doebler. Doeblerself-published her book, "Ditch the Joneses, Discover Your Family," after successfullyrevamping her financial life to enable her and her family to live on oneincome. "If there is truly a problem, you'll see a pattern," says Doebler. Onceyou identify the pattern, you can catch -- and stop -- bad behavior before ithappens.

2. Sort out "wants" versus"needs." Kathy Nelson, a laboratory supervisor who lives in Pueblo, Colo.,wanted to give her two daughters a private education. So she did, even thoughthe public schools in her area have an excellent reputation. Nelson paidtuition with a check and put all her living expenses on a credit card. "I wascoasting by," she says.

Soon, Nelson coasted herway to $48,000 in credit card debt, most of it carrying a 24 percent annual percentagerate (APR). After talking with a credit counselor, she realized that while shewanted private school for her daughters, they didn't need it -- and it wasdestroying her financial future. She transferred the girls, now 12 and 9, to apublic school, where they're thriving socially and academically.

Nelson has whittled hercredit card debt down to $10,000. Her daughters know why they switched schools, and as aresult, they are much more conscious of money and its value. "When we buy icecream, they get the kind that's on sale, and they know that if we see a movie,that's something special," Nelson says.

3. Think first, act second.The longer you ponder an action before actually taking it, the more likely thataction will be rational, experts say. Marlatt advises working through afour-part decision matrix, looking at the immediate consequences, positive andnegative, of giving in to an impulse, then looking at the same set ofconsequences if the impulse is not indulged. Not only does the matrix exploreevery corner of a decision, it also eats up a buzz-killing half-hour, he says.

Visual cues can haltimpulsive actions as well. Todd Mark stuck a picture of a famous mouse in hiswallet to remind himself of his long-term financial goal: a trip to DisneyWorld with his children. "Every time I opened my wallet, I looked at Mickey andthought, 'Do I really need this extra DVD or Wii game or whatever?'" says Mark,vice president of education for Consumer Credit Counseling Service of GreaterDallas, a nonprofit agency.

4. Start small. Whenembarking on a new, healthier financial life, start with a small, manageablestep. When Mark talks to his clients -- who, on average, carry $28,000 in credit carddebt -- he suggests different strategies for paying off debt. "It's notabout what's fastest or easiest," he says, "but it's the one that willreinforce you to stay on track."

One strategy, called laddering,calls for making minimum monthly payments on all cards but one, and "throwingeverything else at the one with highest interest," Mark says. The immenserelief they feel at finally paying off that high interest card gives clientsmomentum to continue on the path toward financial health.

5. Think positively. Wordsand phrases can mean the difference between success and failure when it comesto forming new habits. One example is the word "budget," a favorite withfinancial planners. "It feels like deprivation, says Susan Hirshman, author of"Does This Make My Assets Look Fat? A Woman's Guide to Finding FinancialEmpowerment and Success." Hirshman, who lives in New York City, prefers"spending plan," a term that helps consumers focus on what they can enjoy, noton what they can't have.

6. Plan ahead. Makeshopping lists, and stick to them. Another trick: Bring only enough cash to thestore to buy what you need. Doebler goes so far as to advise giving not onlychildren, but the adults in a household a weekly allowance. She also advisestaking a trusted friend -- the kind who will help you rein in habits, not thekind who encourages indulgence -- along on big-ticket shopping trips.

7. Don't become a Puritan."People don't like to be deprived," says Belmont. Reward yourself for goodbehavior, such as finally paying off a car loan or credit card bill, with asmall, controlled indulgence. The operative word, she says, is "controlled."It needn't be a Coach handbag. How about a nice pair of socks?

8. Work through setbacks. Onetumble from the wagon -- an extravagant impulse buy or a late credit cardpayment, for example -- and it's easy to say, "I blew it," and then give up.Keep going, Marlatt says, adding that the first three months of any shape-upprogram are the toughest, and the highest risk period for backsliding.

Mark suggests alaser-sharp focus on the end result: More money in the bank, less worry aboutfinancial woes. He likens it to dieting. "Getting healthy might not be as muchfun as sitting around eating dessert," he says, "but you have to focus on howgood it will feel."

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