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Putting your mind to it: The willpower instinct
Putting our minds to what shapes our decisions is one way to get control of personal finances.
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Kelly McGonigal
From losing weight to saving for retirement, willpower is the key to taking control of our lives. So says Kelly McGonigal, a health psychologist from Stanford University who’s just written “The Willpower Instict,” chronicling the science and practice of self control.
“Part of us kind of wants to want,” she tells Tess. “We go to the mall, or we’re searching online, and we like that feeling of wanting. It makes us feel optimistic.”
According to McGonigal’s "Terror Management Theory," we feel more powerful when we buy status goods (handbags, cars, etc.) even if we can’t afford them. But, she says, paying attention to how spending makes us feel can give us a tool to managing our need for a short-term win that could really be a long-term loss.
Click on the audio player above to listen to the interview.
I've long known that I'm a spendthrift. I love to buy, buy, buy. However, years ago I made note of this tendency and began taking money out of my hands. At the time interest on savings was about 4% but we were paying 7% on our home loan. So I, being in charge of the bill paying, rounded the payment UP by the nearest $25.00 thus effectively saving at 7%. We did have retirement accounts and an emergency fund, but that was due to my husband's frugality.
When husband died and I had to move (for a job), I sold that first house, bought another house plus a duplex. I did the same process (upped the payment) on both properties. For a period the interest on loans was 20% and more, but my loans were still at 7 or 8 percent. After years of this practice, plus an inheritance, I had REAL money in equity. I am now over 65 and have an income from 10 properties (none bought during the bubble), own 4 outright and have very low interest loans on the others. And I did NOT need a lot of will power.
