Living well with the money you have: author and syndicated columnist offers straightforward financial advice for people looking to take control of their money.

Think about the word asset. What exactly does it mean? An asset is an item of property, a person, thing, or quality regarded as useful or valuable. That definition is broad enough to allow most people to justify most of what they buy as an asset. You convince yourself to buy a big, expensive car because it will "hold" its value in case you want to sell it later. But selling this asset usually means acquiring debt to obtain another car. Doesn't that defeat the purpose? Does a banker consider your Lexus an asset? Does it improve your chances of getting a home loan? Not if you still owe money on it.

We amass a great deal of things, but how much of that stuff maintains its value? Did you know that there are more than 35,000 self-storage facilities in this country? Americans' houses and garages are overflowing with so much stuff that we have to rent extra space to keep it in. I know someone who rented space in a self-storage facility for her clothes because she ran out of room in her closet. Crazy!

I want you to think about all the stuff you have because, ultimately, I want you to determine whether too much of your income is being devoted to servicing debt to pay lot personal property that depreciates every year.

There are four types of assets that make up your net worth. Three don't require you to rent self-storage space and are more likely to put you on the path to financial security. They are called appreciating assets.

The second asset category is personal property. This includes your automobiles, furniture, clothing, and electronic equipment. Technically, personal property is counted on the asset side of your personal balance sheet.

However, once you walk out of the store or drive off the car lot with this type of asset, it immediately loses a great deal of its value. These assets are otherwise known as depreciating assets.

Want to see how much of your income is spent to acquire assets that aren't likely to make you wealthy? It's not a perfect formula, but figuring out your debt-to-income ratio will give you some idea of where your money is going. This is a number, expressed as a percentage, that compares the amount of your debt (excluding mortgage or rent payment) and your monthly gross income.

Mortgage lenders look at the debt-to-income ratio all the time. When you apply for a mortgage, a lender will first determine the percentage of your gross monthly income that goes toward housing expenses. Typically, your monthly housing expense should not be greater than 28% of your gross monthly. Mortgage lenders will then look at your total-debt to-income ratio (all your debt obligations including your mortgage payment) to determine whether you are able to handle a home loan. The maximum ratio they typically like to see is 36%, although increasingly lenders have allowed borrowers to have a total debt-to-income ratio as high as 50%. Still, your basic debt-to-income ratio compares your debt load with your income. The lower your ratio, the better off you are financially.

"Maintaining a good debt-to-income ratio will keep vital financial doors open," says Rudy Cavazos, director of corporate and media relations for Money Management International, one of the nation's largest nonprofit credit counseling agencies. "Owning a home and a car is just the beginning. A home requires improvements, and cars must be replaced."

To calculate your debt-to-income ratio, use you r gross monthly income. Include any bonuses, tips, commissions, alimony, child support, dividends, interest earnings, and government benefits. Next, figure out your monthly debt obligations (excluding mortgage or rent payment). Include payments for your car, installment loans on furniture and appliances, bank loans, student loans, and credit cards (use the minimum amount due).

Now divide your monthly minimum-debt payments by your monthly gross income. For example, if you have a gross monthly income of $2,000 and minimum payments of $400 on a car loan and your credit cards, you have a debt-to-income ratio of 20% ($400 divided by $2.000 equals 0.2).

About one in 12 American families (8%) had a negative net worth in 1998. About one in eight families (12.1%) had a net worth of less than $5,000.

"Wealth creation rarely happens by chance," says Theodore R. Daniels, president of the Society for Financial Education and Professional Development. "It is generally the result of informed choices about spending, savings, and investment."

Many of us--actually you because I'm a reformed shopaholic--shop as a form of entertainment. Americans go shopping an average of 1.9 times a week, according to retail consulting firm WSL Strategic Retail.

"I shop, therefore I am" is the credo of the new American consumer, the Firm announced when it released the How America Shops 2000 survey, which tracks how, where, and why Americans shop.

"The role of shopping in American life has changed dramatically since 1990," says Wendy Liebmann, WSL president. "No longer is shopping solely about practicalities alone. Today, shopping is about who we are, how we live. Shopping is life."

Have people lost their minds? How on Earth did shopping become our way of life?

Does the tenet, "I shop, therefore I am," define who you are? If it does, you better get used to saying, "I shop, therefore I don't own a pot to pee in or a window to throw it out or.

"The most important fact about our shopping malls, as distinct from the ordinary shopping centers where we go for our groceries, is that we do not need most of what they sell, not even for our pleasure or entertainment. not really even for a sensation of luxury. Little in them is essential to our survival, our work, or our play, and the same is true of the boutiques that multiply on our streets," says Henry Fairlie. Our obsession with shopping is standing in the way of financial security. We should be treating shopping as a chore, not a social outing.

Stop participating in an activity that requires spending money you don't have. In many respects, men have it right when it comes to shopping. Many men abhor shopping. As a result, they minimize the time spent in malls.

Let's look at how a lot of men shop. They decide what they want. They pick a day to go to the store. They go to the store. If they can, they park right outside the store to avoid having to trek through the mall. They buy only what they planned to purchase and leave immediately afterward. Their shopping trip is short and sweet.

Malls should be for shopping. Don't hang out at the mall. Don't meet your girlfriends there. Avoid, if you can, eating at the mall. Don't window shop. Tell yourself you are on a mission.

I actually don't enjoy shopping anymore, but I'll be honest. This hasn't always been the case. I once wrote a weekly column for the Baltimore Evening Sun called "Born to Shop." I lived to find bar gains, Shopping gave me a high. I once spent a solid month going back and forth to a store nearly every day waiting for a $200 sweater to go on sale. During each trip, I would take the sweater in my size and hide it among clothes on another rack so it couldn't be sold. The sweater finally was reduced by 709%. Do you know I've worn that sweater all of three times in the 15 years I've had it?

At one time in my life, I thought bargain shopping was my God-given gift. I would actually have withdrawal pains if I went one weekend without shopping. However, I realized that every time I set foot in a mall, I came away with things I didn't need and had no intention of buying. I often bought something just to make the trip worthwhile.

If you want to accumulate appreciating assets and not sweaters, you have to stop thinking you have discretionary income.

The key to cutting your spending is tuning out the marketing machine that tells us we need to buy, buy, and buy. How can you avoid the advertising hype? Here's how:

Remove yourself from temptation. Recovering alcoholics shouldn't frequent bars nor should spendthrifts frequent mails.

Keep a spending journal. Whenever you're tempted to go shopping, write down why before you go. Write down how it will make you feel to add more debt to your credit card. Write down what's motivating you to spend the money. Are you stressed about something at work? Are your children getting on your last nerve? Has your spouse pissed you off? Putting your thoughts to paper has a way of making you think about your actions.

Tape your latest credit card statement to the Inside of your journal. Maybe this will help you remember what it feels like to open that bill and see that bloated balance. Use this journal to also keep track of the money you spend for everyday purchases.

Ask why before you buy. Are you really going to use that bread maker? Look around your kitchen. Is that Crock-Pot you bought still in the box? (Mine is.) Be honest with yourself. Sure, it looks easy on the infomercial to prepare banana nut bread, but are you likely to become Martha Stewart? Are you really going to slice and dice a bunch of vegetables for your children? I know. You worry that your children live on cheese curls. You want them to eat healthier. But start first by buying fresh vegetables and fruits before you spend three easy payments of $19.99 to buy some machine to slice and dice them.

Give yourself a time-out. Make it a habit to wait at least 24 hours before making a purchase, no matter how small. This is especially true for items you see on infomercials. This is going to take discipline. I've been there before. You're sick or bored or depressed, and you turn on cable TV. You see the commercials for Dean Martin's Celebrity Roasts. It's funny. The deal sounds so reasonable. You can start your collection today with the roast of Frank Sinatra for only $9.95 (plus $3.95 S&H), the voice-over says.

About every other month, you will receive two individual full-length roasts on a videotape for $19.95 each plus shipping and handling. You can cancel anytime! But you know what always happens. You don't cancel the order, and now you've spent another $40 or $50 on something you don't need. How funny is that? Not very.

Remember that when you use your credit card, you are getting a loan, Each time you reach for your credit card, ask yourself if you would go into a bank branch and ask for a loan for whatever it is that you're about to buy. Really, do it. When you pick up a shirt, ask yourself, "Would I sit down with a bank loan officer and ask him or her to finance a shirt and pair of pants?" Would you fill out a loan application for bath beads? For your 10th pair of pumps, would you run down to the local bank and fill out those long forms, listing your former address, current employment, salary, and all the other information needed to get a loan? Of course you wouldn't, and yet that is fundamentally what you are doing when you charge purchases on your credit card.

Go cold turkey with your credit card. For two months at a time, try to avoid using credit (even if you pay the bill off every month), You will be surprised at how much you save.

Find yourself a "saving sponsor." In Alcoholics Anonymous and other 12-step programs, people are encouraged to find a sponsor to guide them along their road to recovery. I encourage you to do the same if you need to save. My sponsor happens to be my husband. Together we keep each other on the saving path. A saving sponsor helps keep you on track. Think of this person as the angel on your shoulder who will help you become a saver, not a spender. This person's main job is to talk you out of buying stuff. Take your sponsor shopping with you. Call her when you are tempted to go to that midnight shopping sale. By the way, ask yourself what it is that you have to buy that can't wait until daylight hours.

Step away from the spendthrift. Many people have a friend or relative who loves shopping. Their mantras are "Born to shop" and "Shop till you drop." This friend or family member can't wait to tell you about some sale or the latest discount store opening. When it comes to shopping, separate yourself from the spendthrifts in your life because the high they get from spending can be infectious and dangerous to your financial health. This is the person who says to you when you go shopping, "Go ahead, treat yourself. You only live once." "Don't be so cheap." "You work too hard to deny yourself." These platitudes will not help you prosper. You can love spendthrifts, but don't go shopping with them.

Clean house. If you want the best incentive to stop spending, dean your house. Go through every closet and cabinet and set everything out on the counter. Take an inventory. I don't known about you, but I have the habit of buying things I already have at home. You know what I mean. You think you're out of something because there's so much clutter in your house that you can't find anything. Whenever I do an inventory, it immediately kills any urge to splurge. I realize that, I already have too much stuff.

Implement the two-year throwaway rule. If you haven't used it or worn it in two years, throw it away, give it to charity, or take it down to the consignment shop, where you might make some money on it. If you do this, you are becoming serious about keeping assets that have value. You need to make room in your life for the things that really matter. And just because you have freed up some closet space doesn't mean you should run out and shop. It's a nice feeling to open the closet door and not have stuff falling down.

Learn to say "no" to your kids, relatives, spouse, sales clerks, and marketers--and mean it. Nobody can make you spend your money.

Now that you know where you stand financially and you have put in place some anticonsuming measures, stop accumulating stuff: Ask yourself this question: "Are my assets crammed into my house or a self-storage facility costing me money?"

HOW DO YOU BEGIN TO ACCUMULATE APPRECIATING ASSETS?

Reduce the amount of personal property you have. And that begins by curtaining your love consuming. Think about what it means to consume.

HERE'S HOW MERRIAM-WEBSTER'S COLLEGIATE DICTIONARY DEFINES THE WORD:

1] to do away with completely 2] to spend wastefully 3] to waste or burn away

Common definition of appreciating assets: assets that have the potential to increase in value and/or produce income.

Common sense definition: assets that you don't wear or drive and that will help keep you from asking at age 75, "Would you like a shake with those fries?"

Common definition of depreciating asset: assets that lose their value over time.

Common sense definition: assets that may make you look good but don't do a darn thing to make you rich.

Common definition for gross pay: income before taxes, deductions, and allowances have been subtracted.

Common sense definition: income you wish you brought home before everybody and their mama, including Uncle Sam, get their cut.

Common definition of discretionary income: the amount income left over after essential commitments, such as housing and food, have been paid.

Common sense definition: the money you spend without having any idea where it goes.

APPRECIATING ASSETS INCLUDE THE FOLLOWING:

* Liquid assets: cash or other financial assets that can easily and quickly be converted into cash with little or no loss in value. Liquid assets include checking, savings, and money market accounts, and certificates of deposit.

* Investment assets: assets held for their potential to appreciate or increase in value. They include stocks, bonds, and money in a mutual fund.

* Real property: land and things attached to it (house, garage). This is by far the greatest source of wealth for American families.

According to debt-counseling experts, if your debt-to-income ratio (excluding mortgage and rent) is:

15% or less: You are doing a good job keeping your debt at a manageable level.

15% to 20%: You are still a good candidate for credit by most lenders.

21% to 39%: "This range definitely raises a red flag," Cavazos says. At this level, start looking at your spending habits and eliminate credit card balances that carry high interest rates.

40% and above: "This is a serious situation," Cavazos says.

The average client seen by Money Management has an outstanding debt (not including mortgage or rent) of $19,000 and annual income of $27,100. If your debt-to-income ratio is this high, Cavazos says, you probably should seek credit counseling. To find a consumer credit counseling agency near you, contact the National Foundation for Credit Counseling at 800-388-2227, or go to www.debtadvice.org.