From Headlines to Hard Times: I watched Ed Mitchell tell his story

This week, I went to a conference for Money Advisers working in the charitable advice sector, at which one of the speakers was a former tv journalist, Ed Mitchell, who, because of alcoholism and debt, became homeless for a while. It was very interesting to hear the perspective of someone who was well-educated, and successful in his career, but despite this lost his home and had to file for bankruptcy.

Mr Mitchell, who told his story eloquently and in places humorously, identified one of the reasons for his situation as being a dislike for personal finance generally, and another, a belief that life would be 'all boom and no bust'. Therefore, he never saved money from his high salary and so when he lost his job, was forced to depend on frighteningly accessible and expensive credit to survive.

He has now recovered from his alcohol addiction, and has a flat, thanks in part to a documentary - 'Saving Ed Mitchell' and also to sales of his book 'From Headlines to Hard Times', which describe his experience. (I will now read the book!)

It seemed to me that this story is an answer to those who think that earning a high income - especially life as a television celebrity or sports person - is in itself the route to financial security.

The temptation to splurge on 'projects' - or spending money on home maintenance

I am struggling with the urge to buy things at the moment. It is all very well for me to get our day-to-day bills down to a minimum, which I've proudly done - and the process continues; yesterday J. negotiated a better deal for us for phone and internet for the next year - but that is of limited use if our one-off spending is high.  The problem for me comes in 'projects'.  Once a project is undertaken - and it can be anything, but is almost always something to do with the house - budgets and plans can go out of the window.  

Until a month or two ago, we had done very little to our house for some time.  Then, our fridge broke, and we decided to replace it with a beautiful, though expensive fridge which we will aim to keep forever. (I am very happy with this decision.)   

Next, we finally got around to getting a plumber to replace our dripping kitchen tap with one bought months' earlier.  Once that was done, we asked him to come back to fix our leaking bath, which he will do today.  He will also replace a cracked wash basin for us.   

We had to repair the fence between us and our neighbours - it is our responsibility - and while we were doing that, decided to get a quote to replace the garden gate which was rotting away. The price was reasonable, and so we went ahead.  

I am determined that we should stop here, having dealt with the main niggles, although the temptation is to carry on; we could add a sink to the washing machine area, we could build the bookshelves we have been talking about for years, we could get blackout blinds for our room to keep out the early morning sunshine which currently seeps through.  

And as I was hoovering this morning, I found myself casting a critical eye over some of our carpets, thinking that some of them could do with being replaced, and others with a professional clean.....

In my view, there are several problems.  One is the slippery slope; once a psychological barrier has been broken, it is only too easy to break it again.  Secondly, the imperfections that you get into the habit of ignoring daily - like being restricted to showers rather than baths for months at a time, or the fact that the kitchen tap drips - suddenly spring into focus when other work is done.   Finally, there's an illogical part of me which deep down feels that money spent on the house is acceptable because it is an 'investment'.  There's an element of truth in this, of course, but it is an argument to be used with caution.

Although I recognise it is bad housekeeping on my part, as well as wasteful of water, to leave dripping taps and cracked wash basins un-mended, there may be something to be said for an ability to live with less than perfect conditions.  I need to put my critical faculties away and be happy with what I have, while distinguishing between what needs to be done, and what it would be nice to do some time.  

A Myers-Briggs practitioner writes about types and attitudes to money

Today, I have a guest post from my fellow UK-based personal financial blogger, Anastasia at  Living on a Budget on a subject of great interest to me.  Among her many other qualifications, Anastasia is qualified as an MBTI practitioner, and so I asked her to write about the impact of a person's Myers-Briggs type on their attitudes to money.  (I'm an INFJ, and what Anastasia says below pretty much rings true to me....)

Many people do not handle money effectively. But why? Laziness? Ignorance? Apathy? Fear? Can so many people really be so inept at handling money? Or is there something else? Do other factors, such as personality type and gender, also play a role?

The question is an intriguing one… 

Myers-Briggs Type Indicator (MBTI) was developed by Isabel Myers and Katherine Briggs to try and understand the differences and similarities in human personalities. The test is based on the work of Carl Jung, a Swiss psychologist who believed that personality traits are innate. Each year, more than one million people take the MBTI, which analyzes people by these four ranges of personality traits.  

Thinking-Feeling: This range focuses on how people make decisions. Thinking (T) people prefer to decide on the basis of logic, analysis and reason. They tend to follow their head rather than their heart, whereas Feeling (F) people usually decide first on the basis of personal preferences, second, on the basis of logic. 

Judging-Perceiving: This range suggests the type of lifestyle and work habits people prefer. Perceiving (P) types are more spontaneous and seek out additional information and options. Judging (J) types tend to be planners, preferring more order and structure.  

Sensing-Intuition: This describes how people take in information. Sensing (S) people prefer concrete facts, organization and structure. Intuitive (N) people tend more to hunches. They want to know the theory first before deciding what facts are important.

Extrovert-Introvert: This category focuses on how people get their energy. Extroverts (E) are more energized by interaction with others, Introverts (I) by the inner world of reflection, thought and contemplation. 

One survey found that based on the Myers-Briggs Type Indicator (MBTl) two preference dichotomies are especially relevant to personal financial management: the Judging / Perceiving, and Thinking / Feeling preference combination. 

The Judging types of both genders are more interested in and more savvy about managing their finances. They actually enjoy managing their finances more, and are better diversified in their investments, than the Perceiving types.  

The Feeling group is less likely to own a property, have a brokerage account or measure their progress. 

How else could your preferences affect the way you deal with money? Let’s have a look at each preference and its implication:

E - Extroverts would rather deal with money in a social situation. Prefer face to face banking rather than on line, for example. Pictures of the stock market traders that I've seen on TV seem like prime examples of Extroverts (and an Introvert's worst nightmare). 

I - Introverts need down time away from people in order to recharge. This doesn't mean that we don't like people, so I'd bet Introverts deal with most of their money stuff online. Online budgeting communities like Wesabe and blogging are both good examples of how Introverts can interact with other people, and still get their down time. 

N - Intuitive people probably play the stock market, where their inclination to find patterns for the future can get a workout. 

S - Sensing types are probably more into automatic deposits into a retirement funds, ISA, or other high yield but predictable returns. (I'm also guessing more Sensing types end up with a sizeable retirement nest egg.) 

T - Thinking types probably make the best math based financial decisions. When they do have to pay off debt, they work on the one with the highest interest rate first, and then work their way down. Or they would be at least inclined to apply some sort of debt repayment method rather than “just somehow” pay debts off.  

F - Feeling types, however, probably buy stocks on how much those stocks are ethical, environmental etc. (depending on values most important to those people) 

J - Judging types have a plan. They have a budget, and have mapped out how much to save, spend, and invest for their goals. I think Judging types would do the math to see how much money they would save (or lose) by taking out cash on a very low / 0% interest card, and putting that money in a savings account (shtoozing), making only minimum payments until full interest rate kicks in. 

P - Perceiving types probably would prefer very flexible investments with immediate access and no strict deadlines.  

It is important to know and understand your MBTI type as it can help you to make decisions based on your personal strengths rather than on what other are telling you!