It seems everyone uses their debit card for every purchase these days. They cite the ease with which they make transactions. There is no need to carry cash and the worries that accompany holding a bunch of cash are erased. It really seems like this phenomena has occurred in just the past two years. Pretty much every store you go to will accept debit card regardless of your purchase size. However, it’s not all great news when it comes to using your debit card. Here are five disadvantages to this fad:

1. Record keeping is mandatory. When you’re using a debit card you have to note each transaction so you’re not in danger of over drafting from your account. You need to know what your balance is at all times. If you over draw from your account you’re going to accumulate banking fees which can sometimes be as much as $100 for each transaction you conduct after you’ve gone in the negative. You also run the risk of severe embarrassment if you’re rejected from a store with a long line of customers behind you.
2. Convenience is not always guaranteed. If you happen to be at a place that doesn’t take a debit card, then you’re up the creek. Your kid wants to grab a treat from the ice cream man? You can’t give them your debit card. It only seems like every store or restaurant takes a debit card. You’re bound to come across a place that won’t take your card at least once or twice a month.
3. Hidden fees are everywhere. If you’re not using an ATM affiliated with your bank then you’re going to have to pay a fee. On top of that, many banks then charge a foreign ATM fee. These fees can get as high as ten dollars a pop. Always read the fine print before you take cash out with your ATM debit card.
4. Internet scams are commonplace. If you use your debit card to purchase goods online then you have to be careful. Your information can get lost in cyberspace and fall into the wrong hands.
5. Is your card lost or stolen? This is the worst feeling in the world. You want to believe that nobody would ever do anything wrong with your information, but your card can fall into the wrong person’s hands. If you make a delivery order with someone over the telephone, they now have your card number, expiration date and security code.

Heather Johnson is a regular commentator on the subject of credit card types. She welcomes your feedback and potential job inquiries at heatherjohnson2323 at gmail dot com

It’s a simple rule, and most would consider it common sense. But, the U.S. has a negative savings rate, meaning this common sense rule may not be so common place. I recently saw a statistic that claimed that about 43% of American families spend more than they earn each year.

It’s helpful to understand why people over spend, and be aware of any that might apply to you.

10.Keeping up with the Jones’ – Psychology plays a big role in our spending habits. We want to feel as successful or more successful than those around us. We spend a lot of money to keep up that image. The reality is, the neighbors probably can’t afford that new boat either.

9. Avoiding the truth – It’s easy to overspend when you don’t keep tabs on how much you have. People will go for years unaware of their true financial situation because they’re afraid to look at what kind of mess they are in. It’s easier (temporarily) to just avoid it. They’ll pay their minimums and add new credit cards as necessary ignoring the growing debt total.

8. Counting the chickens before they hatch – In National Lampoon’s Christmas Vacation, Clark Griswold made a large down-payment on his swimming pool expecting that his upcoming Christmas bonus would cover it. Instead, he was enrolled in a Jelly of the Month club. We are often similarly optimistic about incoming money. It’s spent before it’s received, and it’s often not as much as was expected nor received when expected.

7. Plastic doesn’t feel like real money – It’s common to spend more when using credit cards than cash. The experience of hading over a card that you get back is just not the same as handing over some cold hard cash and seeing it disappear.

6. Immediate gratification – It’s all around us. We’re bombarded with the immediate gratification mentality. “Instant pain relief”, “fast food”, “on demand video”, and the big financial one, “buy now, pay later”. We’re too used to getting what we want now even if we don’t know how we’ll pay later.

5. Lifestyle maintenance – Most people increase their expenses as quickly as they increase their income. The same cannot be said for decreases in income. Once we become accustomed to a certain lifestyle, it’s pretty difficult to cut back, even if our financial situation changes for the worse.

4. Poor as a child – Whether they’re trying to make up for their deprivation as a child, a fear of money being taken away that isn’t spent immediately, or a lack of financial understanding, being poor as a child is an often used excuse of overspending adults.

3. Sense of power – Spending money actually makes some people feel powerful. The more they spend, the more powerful they feel, and the only way to get that rush is to spend more money.

2. Prove self worth – Buying that fancy new car proves you are somebody, right? For some people spending makes them feel like they are worth something to the world.

1. Can’t say no – Some people feel like a failure when they can’t meet the wants of others. Whether it’s new toys for the kids, new outfit for the spouse, or a night out with the friends, some people just can’t say no, even when they can’t afford to say yes.

Click here to view the embedded video.

The pursuit of material success often is the root cause of burnout at midlife. In fact, a recent study at the University of California at Berkeley found that people primarily motivated by the love of their work grow dissatisfied as they begin to make more money.

The first step to breaking free from the materialism trap is to understand the difference between “need” and “want.”

Our needs are relatively few, even from birth. We don’t need a lot of stuff, toys, gadgets, etc. We need shelter from the elements, clothing, food, love and understanding. We need friends and family around us.

We do not need 500 cable TV channels, brand new luxury cars, 5,000-square-foot homes in exclusive neighborhoods, lavish ski vacations, and smart phones that do everything but think for us.

There is nothing wrong with wanting these things. But understand that these things do not make us happy, in and of themselves. And, they are often links in the chains that bind us to jobs we despise.

Studies have shown that the more advertising a person is exposed to, the more they buy and consume. What does this mean to you? The more television you watch, the more magazines you subscribe to or read, the more money you want to spend on things you don’t really need. Marketers are taught that success comes from selling to wants not needs.

One way to notice your wants versus needs is to go through your household, garage and attic and locate all those objects that you really needed to have, and which you bought, but lost interest in a few days later and they have been collecting dust since then.

I don’t suggest being too hard on yourself, because if you forbid yourself of every pleasure, your brain may rebel and send you into a buying binge. Instead, start with a simple observation. Every time you are about to buy something, ask yourself whether you really need it and observe the response. One day this observation will result in your changing your mind and not buying the thing that you don’t need. Then it’ll happen again, and after some time you will be very comfortable at saying ‘No’, because you will feel good about making a better choice.

The amazing thing is that once you learn to live on less, it becomes a habit. The peace of mind that comes from relying less on materialism to define success usually leads to a greater and deeper happiness.

Findings from the study indicated that most people have had to make drastic changes in the way they spend money. For example:

• 60 percent of respondents have to rethink the way they spend money.

• 41 percent have paid off debt more slowly.

• 43 percent have cut back on recreational activities.

• 25 percent have gone without basic necessities (food, heat, etc.).

• 44 percent are worried about how they are going to make ends meet.

These changes in personal finance seem to have also affected behavior at work. Changes in personal finance were associated with lower levels of job performance, less enthusiasm, less willingness to help others, fewer positive feelings about the organization, higher levels of depression and an increased sensitivity to minor irritants at work.

The price of gas has caused significantly more stress at home which is carried over to opinions of work. The stress caused by increased gas prices may be increased by employers’ failure to recognize the problem. The vast majority of employees (92 percent) indicated that their company has failed to even acknowledge that a problem exists, while 30 percent of employees felt that employers should do something to help. When asked, employees indicated that their company should offer financial support. On average, employees felt that a $30 a week subsidy would reduce much of the stress caused by high gas prices.

Interestingly, more than one-third (35 percent) of employees indicated that they would change jobs with comparable pay and responsibility if some form of assistance was offered. Finally, only 15 percent of employees felt that the price of gas would affect company profitability.

While, there are things that organizations can do to help, subsidizing employees for their travel is problematic for a number of reasons. However, companies can help by developing carpool programs and offering tips on how to maximize gas mileage. Allowing employees to telecommute may also alleviate much of the financial strain.

Acknowledging the difficulties associated with high gas prices is important, and so is communicating how gas prices affect the company’s bottom line. Employees who are affected the most are more likely to report that their company is unsympathetic to the problem.

So let’s step back from discussion about saving, investing, and accumulating money, and let’s talk about how we spend our money. When it comes to spending your dollars wisely, some purchases may be wiser than others–at least as far as happiness is concerned.

Let’s say you get a bonus at work. Do you spend it on a new toy (whatever your “toy” of choice might be) or a vacation? If you want to be happier, you should spend it on the latter. People receive more enduring pleasure and satisfaction from investing in life experiences than material possessions.

Taken from a practical perspective, this seems to make sense. If your house was burning down and you only had time to grab one material possession, what would it be? For many, it would be their photo album. The memories of different experiences that those photos conjure up are priceless.

A national survey involving more than 12,000 participants, conducted by Harris Interactive on behalf of Northwestern Mutual Financial Network, found similar results. When asked which made them happier, an experiential purchase or a material one, most people chose the experiential purchase.

Here’s some of the reasons why:

Experiential purchases are more open to positive reinterpretations. For example, if you go on a hiking trip, and the weather is terrible, you might not view it as a pleasurable experience in the here and now. Instead, you may view it as a challenge, and over time remember the positive aspects of the experience more than the negative aspects. With material things you can’t do this, because they are what they are.

Experiential purchases are a more meaningful part of a person’s identity. Our culture highly values accomplishing goals and challenging oneself. We strongly value accomplishments. Experiences tend to be associated more with deeper personal meanings than possessions.

Experiential purchases contribute more to successful social relationships. Experiences foster relationships because you tend to do things with other people, so there is a great social aspect to it. Furthermore, we often share stories about experiences because they’re more fun to talk about than material possessions.

So when you are out spending your hard earned money remember that spending on things you can do, as opposed to things you can have, will make you happier in the long run.

Besides being fairly disgusted with what the kids expected and received, I was curious as to how growing in that lifestyle affects their perception of money. At the end the show, the young girl made the statement that “My party cost over $200,000 and it was definitely worth it.”

Does she have any real understanding of money? Could spending that much money on a birthday party ever be worth it? How many better ways could you have thought of to spend that money? How much of her self-worth is based on her parents money, and what would happen if they lost it all? What kind of impact will getting everything she wants as a kid have on the rest of her life?

So now it’s Friday night and I have to find someone to fix the brakes before we leave on Saturday. But, it’s not so bad, right? It’s not expensive to replace brake pads and, hey, it’s just something that has to be done every once in a while, right?
Wrong. We can’t just replace the brake pads because “everything is shot”. Of course it is. Could I have expected the mechanic to say anything different?

The perfect start to our vacation…a bill for half a grand to fix the brakes. Good times.