FADD?

Gary — Mon, 01 Sep 2008 15:00:00 GMT

If you Google "attention deficit disorder" you'll get 3,150,000 returns. Leading the pack is the Attention Deficit Disorder Association. As near as I can tell, it was about 1980 when doctors first started talking about people who had "attention deficit disorder". Move forward a few decades to today and you'll hear the phrase frequently. Not only in relation to children, but also to adults. there are a variety of similar disorders and ways to describe it: ADHD (A.D.D., ADD/ADHD, ADD-ADHD, A.D.D.) according to the add-adhd.org

I think that it's time for a new designation: FADD. It will stand for Financial Attention Deficit Disorder. Hard to say how many people suffer from FADD, but based on my email and the headlines in the local paper it's a lot.

There are a variety of symptoms. An inability to see the financial consequences of a decision. The need for immediate gratification regardless of cost. The overwhelming desire for an immediate solution to a financial problem. These are the most common of symptoms. Let's look at them one at a time.

Many people are inable to see the financial consequences of their decisions. In fact, that's why credit cards were invented. You can see FADD at work at malls and other places where people shop. Many who suffer with FADD begin with smaller items. It's not uncommon for them to spend an entire day at the mall shopping. Those suffering from advanced FADD will be carrying multiple shopping bags from various stores in the mall. Acute sufferers sometimes take purchases out to their car in the parking lot and return for more shopping. When challenged as to how they'll pay for their shopping sprees they can become dangerous. Be cautious approaching someone displaying this type of FADD behavior. They've been known to ridicule the financial status of people who don't share their urge to shop.

Another similar FADD behavior is the person who compelled to make a purchase now without thinking of the costs. Any time that you hear someone convincing themselves that they can afford the payments you're probably dealing with a case of Immediate FADD (or IFADD). It's unfortunate, but salespeople are prone to encourage FADD behavior. Initially people exhibiting this type of FADD limit themselves to small items and they make an attempt to delay purchases. Some IFADD victims are able to limit themselves to buying knives and costume jewelry on the shopping channel or internet. But most find their IFADD is progressive and they soon move to larger items. Most commonly they'll progress to electronics/appliances, then automobiles/boats/recreational vehicles and finally to overly large homes (sometimes known as "McMansions").

The third most common symptom of FADD is the inability to pursue a long-range financial plan (sometimes known as LR-FADD). This sufferer requires an instant solution. The symptoms vary from case to case. In one variation victims are unable to save for the future. They're unwilling to put money away today for a need later. IRAs and 401k plans are especially vulnerable to the FADD sufferer although the symptoms differ. Someone with LR-FADD will be unwilling to fund an IRA ("I'll never live long enough so see the money"). If they have funded a 401k account (typically with an employer's encouragement), they'll borrow the money out to buy a car or to pay off other debts ("I'm only borrowing from myself").

There are other very similar LR-FADD symptoms that can be hard to identify. In one strain the victim who is in debt because of his FADD behavior expects that any solution will be immediate and painless. Any solution to their debt problem that takes months or years will be rejected as taking too long and being 'impossible' to complete. Unfortunately in these cases, bankruptcy has been the only solution that's proven effective (and then only under supervision to prevent the victim from returning to previous FADD behaviors).

It's unusual for a FADD victim to recognize that they have a problem. Usually it's up to a friend, loved one or financial advisor to identify the symptoms and suggest treatment. If you see someone you love exhibiting FADD approach them cautiously. While not prone to violence, they have been known to terminate long-standing relationships when confronted with their FADD symptoms by a friend, relative or co-worker.

Drug and alcohold therapy does not appear to work. Typically self-administered in moderate doses, only a very temporary reduction of symptoms is produced. And, in some cases, the patient can become agitated while self-medicating. Therefore drug and alcohol therapy is to be avoided.

Counseling appears to provide the best opportunity for the FADD sufferer to recognize their condition and embark on a course to reduce or eliminate FADD symptoms. Many patients report that by studying their habits and seeking out alternative behaviors they can lead a normal, productive life. In a majority of those cases patients demonstrate no propensity to return to FADD behavior patterns.

Friends and relatives are encouraged to addess the topic of FADD with those who demonstrate the symptoms described. A non-confrontational approach emphasizing alternative behaviors is generally perceived to be the best method (sometimes called "informational therapy"). Suggesting written resources (like The Dollar Stretcher ) is often used as a first step. As with all interventions, care for the victim is paramount. Fortunately the new information therapies appear to be making a difference for many FADD sufferers and may offer great hope for the future.

Keep on Stretching those Dollars!

Gary

The Best Time

Gary — Mon, 04 Aug 2008 19:13:00 GMT

Saw an interesting phrase last week. It was supposedly ancient Chinese wisdom. Went something like this. "The best time to plant a tree is ten years ago. The next best time to plant a tree is today."

The more you think about it, the truer it is. If you wanted shade or an apple today it would have been good to have planted a tree ten years ago.

What does eating an apple in the shade have to do with personal finance? Good question! Let's ponder some of the answers.

Retirement is a great example. The best time to start saving for your retirement was years ago. Maybe many more than ten years ago depending on how old you are. And maybe you didn't start putting money away in a pension plan, IRA or 401k way back when. So you can whine about not having any savings now or you can plant your tree today.

Paying off debts is another one. I should have started paying down those credit card balances back when I got that raise. Or when I had that stretch of overtime. But I didn't. So now I owe just as much as I did back then. Probably too late to do anything about it. Guess I could give up and just plan on being in debt the rest of my life. Then again, maybe if I start today it won't be too long before I've made a dent in those balances. Might even get them paid off in the next few years.

What about taking that course to improve your job skills? Or cleaning out that closet or garage? Or taking that cooking course so you don't visit restraurants so often?

Wouldn't be surprised if you come up with a whole list of similar ideas that apply specifically to you and your family.

So don't moan that you didn't start when you should have. So you didn't plant the tree ten years ago. That can't be changed. But you can plant the tree today. And have the joy of watching it grow over the next ten years!

Keep on Stretching those Dollars!

Gary

The Dollar Stretcher : Debt

FADD?

The Best Time