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credit & debt

Exorcise Your Money Demons

Are these six inner devils sabotaging your finances?

Even if you know better, sometimes you can't seem to stop yourself from making poor money choices and sabatoging your financial goals. It's as if you're ... possessed!

If you're haunted by financial demons, fear not. We've got the spells you need to free yourself and get back on track.

DEMON #1: Procrastination

You know what you need to do, but some invisible force is holding you back. This specter can haunt several areas of your finances. For example, perhaps you're putting off saving for retirement because the "deadline" seems so far away. Or you're avoiding addressing your ever-growing debt load because it's so intimidating.

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MAGIC SPELL: Be accountable. You can't sidestep your financial responsibilities forever, so make a goal and make it publicly. Your odds of following through will increase dramatically if you are held accountable for your actions -- or lack thereof. So talk about your goal often with a friend or family member. Or recruit someone interested in the same goal to work on his or her issue at the same time (like a get-out-of-debt buddy). You could even document your financial journey in a blog. Keep yourself motivated by rewarding yourself as you progress. See How to Set Financial Goals for more guidance.

DEMON #2: Entitlement

It's all too easy to confuse needs with wants. After all, you work hard and deserve nice things, right? Whether you're considering big-ticket items ("I need a new car!") or smaller impulse purchases ("I need that pair of jeans!"), letting your sense-of-entitlement devil confuse your angelic rational self can cost you big bucks.

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MAGIC SPELL: Sleep on it. It's hard to realize the consequences of your action, no matter how seemingly small, in the heat of a shopping trip. Take a step back to re-evaluate your decision before you buy. If it really is a need, you'll still need it tomorrow -- or even next week. So before splurging, go home and think about it. I find when I do this, I often forget what it was I thought was so important -- or I'm able to find a much cheaper alternative. Learn more strategies for cutting your spending.

DEMON #3: Ignorance

It's hard to call a habit evil when you really don't know any better. Perhaps you never learned how to handle finances, or maybe you simply don't know where to start. Money management isn't a required course in most high schools or colleges, and talking about money is taboo in some families.

MAGIC SPELL: Get educated. If you're going to realize your financial dreams, you've got to arm yourself with the knowledge to pull it off. You're doing something right already: Hanging around Kiplinger.com is a great start. We've got all the basics you need, plus tools and calculators, personalized advice and timely articles to teach you about investing, money management and spending wisely. You could also check out one of these five great money books for young adults to learn winning financial strategies for life.

DEMON #4: Fear

You know what you should do with your money, but you're paralyzed by fear. What if you mess up? What if you lose everything? So you stick with the path of least resistance. Instead of investing well, you stash your money in a low-risk savings account. Instead of buying that house you've been saving for, you sit on the sidelines afraid to leap into homeownership. Instead of pursuing your dream career, you brood in your menial job. Fear can sabotage your fortunes and ambitions.

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MAGIC SPELL: Start small and build momentum. Remember that it's better to start small than not at all. After a few little successes, you'll gain more confidence and knowledge to work your way up to bigger and better things.

For example, if you're terrified to start investing, don't take your entire life savings and plunk it into an ultra-aggressive stock or mutual fund. Start with a little money in a well diversified mutual fund and gradually increase your contributions and branch out to other investments as you feel comfortable. (See our 30-Minute Investing Start-Up Kit for the specifics you need to get started.) You're sure to experience ups and downs, so keep your trigger finger in check. Learn more good long-term investing strategies.

DEMON #5: Exhaustion or indifference

Staying on top of your financial obligations can seem like a big job -- too time consuming and downright tiring -- so you simply give up. Bills pile up and investments wallow.

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MAGIC SPELL: Automate your finances. You can set up automatic bill payments and contributions to savings or investment accounts through your bank, mutual fund company or broker, or directly with your phone company, utility company, credit card issuer and student loan provider. This way you only have to fret over these expenses one time to set up the plan, and then you can forget about them. All the while you're still keeping your payments -- and goals -- on track. Learn more about how to set and forget your finances.

DEMON #6: Jealousy

Do you ever feel good about your financial situation until you spend time around friends and family who seem better off than you? Jealousy can make you feel restless and even lead you to make poor money choices for your personal situation.

MAGIC SPELL: Tune out the static and set personal goals. "If you look to others to gauge your personal sense of success, you're not going to get an accurate reading," says Joshua Klapow, a clinical psychologist in Birmingham, Ala. There are simply too many variables. Besides, throwing yourself a pity party won't get you anywhere. Setting goals and coming up with a plan to reach those goals will. Ask yourself where you want to be in five years. Then, prioritize those goals and figure out a way to pull them off.

Make a conscious effort to remind yourself of your goals and your progress whenever you feel jealousy creeping in. And remember: Looks can be deceiving. Just because your friend lives in a big house and drives a fancy car doesn't mean he's well-off -- he could be in debt up to his ears. See Young and Restless for Success for more tips.

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