In the last column, I talked a little bit about how paying off a debt can free up your “emotional line of credit”. What I am referring to one of the most basic truths of personal finance, and the single biggest reason behind how people manage to get themselves into trouble. For most if us, it’s simply more fun to spend money than save it. Think about it, how much satisfaction do you get by sending a  $100 check away to a mutual fund, especially today knowing that a few weeks later it might be worth only $50. Compare that to a $100 night out with friends for a nice dinner and a movie. There’s no comparison. 

We humans are driven by an unending quest for satisfaction. We are constantly doing battle against the emotional forces within us, and the natural inclination we have to get more. This natural pre-disposition is exploited by a sophisticated advertising and marketing industry that knows exactly what buttons to press. If you can’t recognize and learn to control the motional power of spending, you will always struggle. 

There are little tricks we can play with ourselves to even the playing field, like restating your access to cash by doing some things which may seem a bit illogical, like having extra taxes withheld from your paycheck. But it all begins with recognition of the awesome power that spending can have over us. 

Sometimes we have to use negative emotion to help us out. For example, the negative emotion of carrying a credit card balance may help  keep your spending in check. Paying off a well-selected low interest credit card balance may therefore not always be the best idea, especially when it frees you up emotionally to spend even more.       

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