Andy Hough

In a consumer-based economy, it’s difficult for people to approach the idea of spending and why we do it when asked. If you stop someone and ask them why they are buying something, they’re likely to tell you that they need it. They probably don’t know why they need it, but they just know that they do. Every day, we spend, we rationalize the purchases we make, and our entire system is built around fostering and encouraging this lack of self-analysis. It’s only through looking inward that we can begin to understand why we spend the way we spend before we can even begin to get our spending habits under control.

The Coupon Mentality:

This is a common misjudgment that we convince ourselves of every day. Though if used properly, coupons can be an excellent money saving device, but it too often equates to being a penny wise and a pound-foolish. Saying to yourself, it’s ok that I spend twenty dollars at lunch because I’m not planning on going out for dinner. It can also mean buying something that you don’t really need only because you have an great coupon for it. Spending six to save one is not a good strategy. You are not striking a counterbalance. All you’re doing is rationalizing spending instead of using a little introspection to know why you’re spending.

I’ve Earned This:

This is a very common spending habit that we’re all guilty of, no matter how frugal we are. It doesn’t matter if it’s a new pair of jeans or a nice meal at a good restaurant, we convince ourselves that we have somehow earned the right to do this. This is systemic of a larger issue of entitlement that, as a consumer culture, we feel that we reward ourselves by spending on things that we don’t really need. We feel like we’re rewarding ourselves for working so hard. This seems totally understandable until it gets to the point where we’re not really asking if we “deserve” something and just buying it. This is an impulse that doesn’t use much thought. If we were to stop and ask ourselves why we feel we deserve something, we’d probably be a lot less likely to buy it. It’s not about spending and more about instant gratification. If we really thought we deserved it, then we’d be getting free insurance quotes in order to save money on costly healthcare. We deserve saving money, but it’s not as immediate or attractive.

I’ll Make Up For It Later:

Saying that you’ll make up for it later on another purchase is one of the most costly lies that we tell ourselves. We’ll go out and spend a hundred dollars on clothes one week and say that we’ll make up for it next week by not going out to eat. This would work if we followed through with it but, unfortunately, we have very short memories and attention spans. As soon as the purchase is made, the thought is gone. Instead, spend your money once you’ve earned it.

Work towards self-analysis when it comes to your spending. Living on credit purchases is an unnatural way to live. Saying that you’ll make up for it later or that you’ve somehow earned it is a gut-reaction that is based nowhere in logic. The power of rationalization is strong, but the will to stop yourself and hold back can be even stronger. It just takes a little effort and the results will prove substantial for your savings.

Whenever I post my income reports including my mystery shopping income I get questions from people wondering what is mystery shopping.  Mystery shopping is when a company hires someone to pose as a customer in order to evaluate the customer service and other aspects of their business.  A mystery shop can give an establishment a truer sense of how the business is run and what quality of customer service is provided since the employees and management of the establishment do not know when they are being mystery shopped.  Many different businesses use mystery shoppers.  The types of business I usually mystery shop are restaurants, banks, movie theaters, and gas stations.  Many mystery shopping companies also hire shoppers for jobs other than mystery shopping.  I’ll cover that in a later post.

If you would like to get started mystery shopping I suggest you visit Volition.com.  They have a lot of posts and material on mystery shopping and you should be able to sort through everything and find the information you need to get started.  You do not have to pay a company to get started mystery shopping.  Check back at the end of this month because I plan on releasing a mystery shopping guide that will give you all the information you need to get started in one place.

I received a free copy of this book for review quite a while back. I’ve been meaning to post my review for over a month but kept procrastinating. Perhaps the habit I should change is procrastination.

The premise behind Change Anything: The New Science of Personal Success, is that by using science you can make it easier to change personal habits. The authors have studied what influences bad habits and give you strategies for helping to overcome them. In this review I will share some of their strategies and how I intend to apply them to help me lose weight.

The authors tell you to identify your crucial moments. These are the moments when you are most tempted to indulge in your bad behavior. For me I generally don’t have any problem eating right in the morning or the evening. When I eat bad it is usually in the afternoon. I need to be more active in the afternoon so I’m less tempted to eat junk food.

The next strategy is to create vital behaviors. These are rules that you create in advance so that you resist temptation during crucial moments. For example you could create a rule that if you were tempted to eat a pastry you would first eat a piece of fruit instead. A couple of the rules I have created are that I need to eat at least one fruit and vegetable a day and drink no more than two cans of Dr Pepper a day. Those are pretty modest goals but they are better than I do now.

The last strategy is to engage all six sources of influence. Their six sources of influence are: love what you hate, do what you can’t, turn accomplices into friends, invert the economy, and control your space.

For love what you hate I plan to eat more of the healthy foods that I do like. I have identified those healthy foods I like and will make sure that they are available to me. I also need to find a way to exercise in a way that I enjoy. I like running and hiking but that is not too enjoyable now because it is so hot. I need to find a way to make these enjoyable despite the heat.

Turning accomplices into friends should not be much of a problem. My wife supports my goal of losing weight and will help me reach the goal by preparing healthy meals and limiting the amount of junk food we buy.

Inverting the economy is something I tried before with my $500 weight loss challenge. The idea of inverting the economy is that it should cost you more to eat unhealthy than to eat healthy. The economy can be inverted both from incentives and loss aversion. I tried the loss aversion technique with my weight loss challenge but it didn’t work for me. I think the reason it didn’t work was because the goal wasn’t short term enough. I kept telling myself I had plenty of time to meet the goal until it was finally too late to reach the goal. This time I’m going to be setting a short term goal of losing one pound a week. To hold myself accountable I’m going to be sharing my weight each week. If I meet my goal I will reward myself (incentive) and if I don’t meet my goal it will cost me (loss aversion). I haven’t decided on what my specific incentive and loss aversion will be. I could do something similar to my weight loss challenge and pay the readers of this blog each time I fail to meet my goal. I am open to suggestions on both the incentive and the loss aversion.

For controlling my space I will be keeping junk food in the house to a minimum. I will also not do any fast food mystery shops unless I am receiving bonus pay. And I have looked over the nutritional facts of the fast food restaurants so I can choose the less unhealthy options on their menu.

I probably need to add a few more behaviors to reach my weight loss goal. I currently weigh 222.4 pounds and would like to get down to 170. At a rate of one pound a week it will be next year before I reach my goal but as long as I make steady progress I’ll be ok with how long it takes. My plan is to update my weight every Saturday. If you have any suggestions I’d be happy to hear them.

Although I wrote this review about using the book to help me lose weight the strategies in the book can be used to change many different behaviors. They can be used to help you stop smoking, get out of debt or to advance your career. Even with the use of these strategies it will still take work to change these behaviors these strategies just allow one to need a little less willpower to change their behavior.

This question is sparked by a recent conversation I had.  Someone I know asked me why they weren’t rich despite  having worked hard all their life and never spending extravagantly.  I’m pretty sure it was a rhetorical question but I thought the answer would make a good blog post.  In the instance of this particular person it was true that they had worked hard and never spent extravagantly.  The reasons the person didn’t get rich are that there job paid just enough to cover modest middle-class expenses.  Also the job did not offer a 401k or any type of retirement plan.  And what savings there were made were put in investments with poor returns and high expenses.   This person never did anything that would have allowed them to get rich.

This made me wonder what does a person need to do to get rich.  I believe working hard is part of it but it is clear to me that by itself isn’t enough.  To figure out what needs to be done to get rich I thought about the people I know who I consider to be rich or at least well-off.  They became rich through three different ways.

1. They owned a business.
2. They owned real estate investments.
3. They worked at a job that paid well above average and put their excess income into investments with a good return.

I probably could have made this just two different ways since the people I’m thinking about that made their money with well-paying jobs also made a substantial part of their wealth through real estate investments.  Looking at these three ways to get rich I have to admit that I’m not doing anything to get rich.  My blogging is a business but it doesn’t currently have the potential to make me rich.  I need to change the potential of my blog and I need to consider the other ways of getting rich as well.

The first and second ways of getting rich can be risky and even the third way has some risk.  I’m thinking the reason many people never get rich is because they never take the risk of doing something that can make them rich.   What have you done to get rich?