Get a Grip: Signs You’re a Compulsive Spender

For most people, a trip to the mall is a harmless excursion. But for an estimated 2% to 8% of U.S. adults afflicted with “compulsive buying disorder,� overspending is an addiction with serious financial and emotional consequences.“Compulsive buying disorder is not unlike an alcohol, gambling or other addiction,� says Ted Beck, president and CEO of the National Endowment for Financial Education (NEFE). “When shopping and spending spin out of control, relationships can be destroyed and financial well-being torpedoed.� NEFE is a nonprofit foundation committed to educating Americans about personal finance.

Here are some signs that may indicate you are addicted to spending in a way that interferes with your life:

 

• You buy things you want, whether or not you can afford them at the moment.
• You buy things to cheer yourself up or to reward yourself.
• You struggle to pay your bills because you always seem to be living on the edge financially.
• You tend to keep buying more of your favorite things even if you don’t have a specific need for them.
• If you have to put off buying something you really want, you feel intensely deprived, angry or upset.

If several of these descriptions fit you and you are concerned that you may have a buying disorder, you may want to consider seeking professional help, according to the NEFE. Individual or group therapy can help treat this problem and teaches individuals how they can develop healthier shopping habits.

If your spending has gotten you into serious debt, Debtors Anonymous is one organization that provides help and support for free.

Source: National Endowment for Financial Education.

Increasing Debt: Not Justa Youthful Phenomenon

The percentage of American families with heads of household age 55 or older that had debt increased from 1992–2004, reaching 61%, almost five percentage points higher than in 2001, according to a new study by the Employee Benefits Research Institute. The average total debt level also rose, from $29,309 in 1992 to $51,791 in 2004. Housing debt was a big factor. Older families with housing debt increased steadily, from 24% in 1992 to 36% in 2004, mainly due to homeowners refinancing their mortgages, cashing out equity in their home, or facing rapidly increasing home values during 2001–2004 when buying a home. The largest increases in debt were among families with the oldest (age 75 or older) heads of household, although this group’s growth in debt was from both housing and non-housing debt.Source: Employee Benefits Research Institute.

Your Financial Health: The 5 Symptoms of“Retirement Postponement Syndrome�

Millions of Americans in their 40s and 50s may be suffering from “retirement postponement syndrome� (RPS) shortcomings that could end up robbing their golden years unless they take strong corrective action, according to a warning issued by the Zero Alpha Group. What are the symptoms of retirement postponement syndrome? Based on their experience in dealing with hundreds and hundreds of clients, the experts at the financial advisory firms that make up the Zero Alpha Group have identified the following five key warning signs of RPS:1) Banking on unsure things. If you are counting on the sale of your home or small business to bail out underfunded retirement savings and investments, think again. As recent months have illustrated, home prices can be mercurial. You should have a diversified investment portfolio that spreads out the risk by avoiding overconcentration of your wealth in the single “basket� of your home or small business.

2) Falling into the T.R.A.P. Many Baby Boomers had children later in life, and others started a second family in their 40s or even early 50s. Both can put even the most diligent saver and investor in the T.R.A.P.: Tuition, Retirement and (Related) Problems. Boomers in their 50s and early 60s with children heading off to college risk seeing their retirement savings substantially depleted at the worst possible time.

3) Counting on an “econo� retirement. If your retirement plan is predicated on the notion that your living expenses will go way down, you could be making a classic mistake. Financial advisors know that spending by retirees (particularly Baby Boomers) often does not go down. Don’t base what you save and invest for retirement on the assumption that your golden years will be your penny-pinching years.

4) Ignoring your “sandwich.� More and more Baby Boomers are finding themselves saddled with medical and housing expenses for aging parents. Investors in such a situation are said to be in the “sandwich generation,� particularly when they are also confronted with paying for college or other expenses of one or more children.

5) Living in your own reality show. All too many parents with children returning to live at home after college—or never leaving home in the first place—end up saddled with their own “reality show�-like headaches. Those parents who impose firm deadlines and require so-called “boomerang� children to share all or most costs are the ones most likely to emerge from the experience with their nest eggs intact.

Source: The Zero Alpha Group (www.zeroalphagroup.com), an international network of independent investment advisory firms.