A Suze Orman exclusive

1. Stop impressing people you don't even know
I know you have heard me say it before: it is ridiculous to spend money buying things you can't afford, to impress people you don't know and may not even like. That means it is nuts to spend gobs of money on your kids simply to impress others - or, maybe worse, to impress your kid. I am not suggesting your child wear a potato sack, but the amount we spend on designer kids' clothes is disgusting. You know it and I know it. Especially for infants. Get real! They're going to outgrow it in a few months anyway! Sure, have a few special outfits, but just look at what you are spending on eventually useless items. Talk about a wasted opportunity! For instance, let's say rather than spending that $100 a month on a few items your kid will outgrow quicker than a New York minute, you take that money and put it toward paying off your credit card bills that are hitting you with interest charges as high as 18 percent. Assume you owe $8,000 on that high-interest credit card (which most families do today). Did you know if you stopped charging on that card and just paid the 2% minimum required each month, it would take nearly 54 years and cost you $23,000 in interest to pay it off? But if you just added that extra $100 to the minimum payment amount each month until the card was paid off, it would reduce your payback period from nearly 54 years to less than four years and your interest charges from $23,000 to a mere $2,811. That saves you over $20,000 in interest charges alone! How can you not see the logic in that?

And here's the kicker: if you start to lower the balance on your credit cards, your FICO score should improve (see my article on Debt and Your Credit), which could qualify you for a lower interest rate on your credit cards, as well as your home mortgage or car loan debt. That would end up saving you even more serious sums of money, which in turn would give you more money to pay off debt and save for your own future. It is ridiculous to not do this. Don't you think that one less novelty item per month for your kid is worth that?!

2. Money does not grow in ATM machines
Young kids think that money comes from an ATM machine. You see, the problem with this is that they have no idea how it gets in there to begin with. They think that some financial fairy godmother comes and just puts it in there for you to take it out. Kinda like the tooth fairy. (And by the way, don't get me started on the tooth fairy. I will never understand why we are teaching our kids there is a financial reward for losing something you really need. But that's a whole other article, so back to the point at hand.) You should start early teaching your children that you work for money and that, contrary to popular opinion, life is not a financial fairytale.