Controlling Impulses

When it comes to protecting your money, one of the biggest dangers is so called impulse trading. Resisting the urge to have something right then and there is a skill everyone needs to learn in order to build a strong financial foundation.

Recently I watched an entertaining TV show called "Auction Kings." One of the pieces being auctioned off was a 1975 Cadillac Eldorado. Cars don't get much bigger than those boats! The car was once owned by Elvis Presley himself, albeit only for around four months. The person selling the car was a celebrity collector who tracked down the vehicle and had owned it for the past twelve years.

Besides the previous ownership documentation, there was nothing else to signify the "King" once owned the car. There were no special Elvis monograms or autographs. No custom work done to the car. No vanity "ELVIS" license plate. It was just your run-of-the-mill '75 Eldorado with a famous previous owner.

In any case, the seller was hoping to get $12K at auction, and the furious bidding ended up hitting $16.5K I believe. Two rival bidders locked horns at the end, shooting the price up much higher than anticipated. When they interviewed the winning bidder afterwards, he said he originally had no plans to bid on the item. He simply got excited, got caught up in the moment, and decided he wanted to own that car.

This is a great example of how quickly and many times unintentionally people can spend large sums of money. Take your car into the dealer for a regular service, and the next thing you know, you're walking out with keys to a new car. Here's a tip: avoid going to the car dealer for service unless you have to. Find a good and trustworthy mechanic so you can avoid the temptation to spend when you don't need to.

Everyone has his own special weaknesses when it comes to spending money. For some, it's classic automobiles. For others, it's luxury handbags. Whatever your Achilles heel is, you'd better put "stop-loss" like procedures in place to avoid buying short-term euphoria and long-term debt.

You've worked hard, so you should certainly treat yourself to some of the good things in life. Just try to prioritize what those things are. Try scheduling your purchases to avoid impulse buys. Give yourself something great to look forward to in the future, instead of being constantly lured into that next big purchase. The money you'll save can then be put into income-producing assets like high-quality dividend-paying stocks. How to do that is the topic of my eBook, "Money Master." You can find out more about that here.

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