Financial Friday Introduction

Feb 2, 2018

To hear this post instead of reading it, jump to the bottom and listen to the embedded audio file.

There is a little corner of this blog/podcast that I’m reserving for the financial realm. I call it Financial Friday, and I’m pretty sure you can guess on what day I plan to schedule releases. For this inaugural foray into this category, I’ll lay the foundation for where I’m coming from and why I will say the things I do.

Story Time

When it comes to money, I’ve made pretty much every single mistake you can possibly make. Here’s a sampling:

• Pay rent with credit card.
• Pay one credit card with another.
• Get a new credit card and transferred all of the balances, snowballing on the negative side.
• Maxed a credit card, so I got more.
• Didn’t pay the card minimums on time.
• Spent more than the card max. (overlimit)
• Been conned out of money.
• Gave money away.
• Bought things I didn’t need.
• Bought things I didn’t even want.
• Paid for other people’s expenses.
• Made decisions based solely on emotions I wasn’t even aware of.

This is a pretty extensive list, and I’m sure I’m overlooking some things but you get the gist. Ultimately, I spent more than I earned. By a lot. Like many, I got my first credit card in college and almost immediately started carrying debt. First it was in the hundreds, then over time it became thousands. This went on for about 10 years before I started to realize this was killing me. I can’t even begin to express to you the horrible mental and emotional place I was, feeling completely trapped and out of options. If it weren’t for friends, I’d have been living entirely out of my car by the end. This was unacceptable. I had to change, somehow.

I decided to try that debt counselling thing, where the credit counsellors negotiate a restructured payment plan with all the myriad credit cards. I’d pay them one sum and they pay everybody else. I was in this for about a year before I compared the before and after numbers, and saw I was doing nothing but treading water. At least it wasn’t rising anymore, but an entire year of living at the mercy of others in order to pour every penny into this and still making zero headway was crushing.

Then I went the debt negotiator route, where they make a deal with the credit card company to take a reduced amount in order to avoid bankruptcy. I continued living as I had been for the last year, but all money went into savings. When the negotiator would contact me and say “card X agreed to take $1k to write off your $5k balance” then I would pull the money out savings and take care of it. Finally!!! A light at the end of the tunnel. I got 3 of the remaining 5 cards paid off this way, leaving 2. One had a small balance when compared to the other – but the other was a multiple of the first 4 combined. The little one decided it didn’t want to negotiate and took me to court, where I had a judgement against me for the full amount. I could not afford for the big card to do the same, so I filed for bankruptcy before they could do that. By that point in time, it had been just over 2 years since I began the process.

The bankruptcy was granted in 2003. If you have never been through bankruptcy, I do urge you to avoid it but it’s also not the end of your financial world. It’s a last ditch measure, not a first line defense. Did you know that the proceedings are public? I remember standing in the court room, listening to the stories of the people before me. What had my jaw dropping in the floor was the number of people for whom this was their second, their third (?!), even their fourth (!?!) time through. I remember thinking that I couldn’t do this again. I wouldn’t do this again. I would figure this crap out!

Before this decision, I never once even considered reading a book on finances. Afterwards? You better believe I read everything I could get my hands on. The single best and more influential book for me is one that I hear very often from others, and that is “Your Money or Your Life” (by Dominguez & Robin). I wrote a book review of it in 2005 and posted it on my non-indexed blog then. I’m reposting here now because it features quotes and pulls out the 9 steps outlined in the book.

I read many more books than just this one, but it was single most impactful. The second most impactful one was Richard Kiyosaki’s “Rich Dad Poor Dad”. There is one sentence he said that really grabbed my attention and has stuck me ever since.

“You can learn how to manage not enough, or you can how to manage too much. Which problem do you want?”

That sentence right there is the single greatest motivator I have found when it comes to managing my money. I combined that idea with my quest for financial independence, and it has guided me ever since.

The Point

It has now been 14 years since I was utterly bankrupt – not only financially but also emotionally, spiritually, and mentally. I agree whole heartedly with Robin and Dominquez’ take on the relationship between money and our own emotional self, though I word it differently. Money is a direct expression of our values, our sense of worth, and how we feel about our ability to affect the world. What governs our attitudes and relationships with money are generally aspects of ourselves which are below the conscious mind. If you are on a path of personal development, I feel it should include becoming increasingly conscious of your finances. If you’re on a path of financial independence, I believe it should most definitely include some personal development at least in the emotional intelligence arena. There is no bigger window into your true, core value system than your money. It’s because of my own experience with this that I made sure to build finance into the Stepping Up to Your Potential roadmap.

The really awesome thing about using money as a tool for guaging developmental progress is that’s it’s pretty clear. The number is either going up or doing down, and thus you’re either gaining or loosing traction on your journey. It’s a wonderfully practical, clearly illustrated measure of momentum. If the relationship between your emotions and your financial life is not easily visible to you right now, that’s fine. It means there’s work to be done because assumptions, hidden agendas, fears and judgments are getting in the way. Good stuff!

But mindset isn’t all I’ll be looking at here on Financial Fridays. While I won’t claim to be perfect with money, because I most definitely do backslide, I will say that I’ve learned quite a few things — not only about managing my money but using it as a tool to help manage myself. In my case, I’ve learned that inattention is the worst thing I can do for my finances. To ameliorate this, I track every penny in and out, and have since 2004. In that time, I’ve tried all kinds of experiments which are continuing to this day. I’ll share some of those tools or practices that I use, maybe even share some of my spreadsheets because I am ALL about the spreadsheets. Love me some Excel!

My hope is that you’ll join me here for Financial Fridays as an extension of the personal development work done the rest of the week here at Stepping Up to Your Potential.

TL:DR

Your financial life is typically closely related to your emotional awareness. While there are money management skills apart from mindset, the behind-the-scenes thoughts and feelings often get overlooked. This section will look at all of it from a practical, grounded perspective with a focus on results.

Resources and References:

Your Money or Your Life: 9 Steps to Transforming Your Relationship with Money and Achieving Financial Independence: Fully Revised and Updated for 2018

by Vicki Robin & Joe Dominguez, with Foreward by Mr. Money Mustache

Rich Dad Poor Dad: What1 The Rich Teach Their Kids About Money – That The Poor And Middle Class Do Not!
by Robert T. Kiyosaki

Featured Image

Taken in the spring of 2016, the cliffs of Shell Beach in Central California.