Donna Freedman: How to find and fix your money problems

Living With Less

Committing 'capital' crimes? CSI 'em

Time for some REAL forensic accounting. Take a cop's-eye view of your spending habits and order your budget leaks to 'freeze!'

By Donna Freedman
MSN Money

Your paychecks barely covered this month's bills. The credit card balance keeps growing. You can't contribute to retirement. Face it: Your budget is D.O.A.

It might be time for "CSI: My Finances." You're looking to uncover what Richard Barrington of MoneyRates calls "capital crimes," i.e., crimes against your capital.

Misuse of credit cards, excessive college loans, failure to plan for retirement, buying more car than we can afford -- any of these factors constitute aggravated assault against a secure future. Taken together, they add up to financial suicide.

Even a simple case of mistaken identity -- wants versus needs -- can result in serious long-term financial consequences, "both for yourself and for those around you," says Barrington.

I'm asking you to take a cop's-eye scan of your finances for clues like spent casings (all those ATM slips) or the smoking gun (your car loan document). Gives the phrase "forensic accounting" a whole new spin, doesn't it?

Just the facts, ma'am

Like any TV shamus, you need to start with the legwork. Jenny Realo, the executive vice president of CareOne Services, suggests a composite sketch -- a rigorous tracking of every expense that will help you see the overall picture and identify the culprits.

"Every penny that goes out the door," Realo says. An old-school gumshoe would use a notebook, but it's OK to utilize budgeting software, a spreadsheet, or a money website like Bundle or Mint.

Participants in Realo's money management workshops learn not only how to track expenses but how to examine them for clues. For example, one woman discovered that 20% of her cable costs were due to on-demand movies that her kids were charging.

Police procedurals talk about "means, motive and opportunity." Anyone with a debit or credit card has means. An Internet connection provides the chance to shop, play online games or book vacations 24/7. Theoretically it's possible to discipline yourself against those first two. But motive, aka the "emotional trigger," can tempt you into a life of capital crime.

Motive doesn't always make sense. If you're barely making bank, adding to the bills is just stupid. But overspending provides "some kind of payoff," according to financial behaviorist Syble Solomon, who created the Money Habitudes tool to help people identify deep-seated money beliefs.

One client spent far more than he could afford on gifts; with Solomon's help, he realized he was trying to buy acceptance. Another couldn't set foot in a store without buying something for her kids, because she loved being "spontaneous."

You might be able to deduce your own motive, or you might need professional help. Once you've identified your motives, put up a roadblock: Implement a cash-only system, find affordable ways to socialize with shop-happy friends, seek spending addiction help if necessary.

Round up the usual suspects

Car loans, high rent/mortgage payments and credit card debt are obvious budget killers. Yet, as I pointed out in "Scare off the financial boogeyman," some people are fatalistic: I'll always have a car payment, so why not have a really cool vehicle?

Or maybe your modus operandi is recreational shopping, pricey hobbies or eating more meals out than in. All of these are budgetary assaults, but some are misdemeanors and others are felonies.

The difference, according to Barrington: "Is this something that's going to put me off track for a month, or is it a situation where once I've overspent I can't overcome it?"

An occasional splurge on a nice restaurant or a new fishing rod is a misdemeanor, and a "slap on the wrist" -- i.e., adjusting your spending that month -- will make up for it. But buying a $40,000 car when you're already carrying credit card debt is a felonious decision. So is planning a $30,000 wedding when you and your intended both have massive student loans.

Don't do the crime if you can't do the time, Barrington advises: "If you overspend in a big way, you're now facing (years) of austerity living in order to catch up. Is that expenditure really worth it?"

Continued: Crimes of passion

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