The Wealthy Barber Says Break the "Gotta Have It Now" Habit

Why do we make our financial life so difficult when it doesn’t have to be?  One reason is that we want to feel better right now and our consumer culture loves to prime the “I work so hard, I deserve something” pump. Feeling stressed, unhappy, dissatisfied?  Buy something – that’ll make everything better - temporarily... Except that after the initial glow wears off – usually by the time you get home – remorse or guilt set in, along with the now monthly payment that goes on and on. Yow.

You know how sometimes we know better, but we do something against our financial best interest anyway?  One of my clients, “John,” hates his job, is super stressed and is sticking it out for his pension that is a long 5 years away. What do you think he and his wife just did? They bought 2 new cars so now they have two big payments a month.  If something were to happen to John or to his wife so that they couldn’t work…. Well, you get the picture.

“The Wealthy Barber” was a smash bestseller a few years ago and the author David Chilton is at it again with ‘The Wealthy Barber Returns.” What does Chilton think we should do with our money?  1) Save, save, save. Pay yourself 10-15% of your  NET income  a year.  On a $50,000 annual salary that’d be 5,000 – 7,500 a year or $400-580 a month. (The only relatively painless way to do this is to create an automatic deducationfrom paycheck to savings/retirement account) 2) Live modestly. According to the mortgage lender you might be able to afford a house payment that’s 30% of your gross income, but what do you have to do without to afford it. 3) Keep track of everything you spend for the next 3 months. I’ve done it and it’s eye-opening how much money we can piddle away on coffee, lunch or stuff we don’t really need.  Chilton would say that banks, mortgage lenders, atms, are not your friends and that “…real wealth comes from saving, not high income.” 

The Secret Language of Money

If you've been reading this blog you know I've been expanding my study of the subject of "money" this year. We need to know how to manage our money beyond the nuts and bolts of budgets and retirement planning. Do you know why you have trouble getting past certain life long money patterns? To understand what's drives the bus of your challenging money behavior here's a story from "The Secret Language of Money" by David Kreuger MD.  Two anthropologists went to two separate yet identical ape colonies to live and observe for a year. After the anthropologists finished their year they compared notes. One had been accepted and assimilated into the colony, the other never was. They couldn't understand why - until one anthropologist admitted he had kept a gun with him. He never used it or showed it, but at some level, he knew it was there. The gun kept him from fully committing - it was his out.

Now, how does the anthropologists hidden gun relate to the story we make up and play out with money. Dr. Kreuger says our money stories are "the subconscious tale you tell yourself about who you are, what money means to you and what it says about you. Our money story isn't only about money. It's about everything." (Kreuger)

What does your money story say about you? Ask yourselves these questions:  1) What's the greatest annual income I can reasonably expect to earn?  $_____   2) What is the greatest annual income my money story will allow me to have?  $_____   Until you become aware of the story that lives underneath the way you operate with money, nothing will really change. Oh, you can create a budget, or tinker with affirmations, but I know from experience that until there's a deep inner shift created with awareness and new behaviors and practiced over time, your money story can't really change.  

Can You Ever Be Too Rich or Too Thin?

"You can never be too rich or too thin."  Babe Paley, 1950s socialite 

Did you know that wealth and weight issues are often tangled together for women? 

Women will go to extreme measures to look good and spend thousands of dollars over a lifetime on diet products, clothes and shoes and justify the expense for reasons that vary from:  "I have to look good for work," to "I'm working so hard I deserve this." By the way, that same justification works for food as well as shopping. Some women shop (or eat or restrict eating) to fill time because they're bored, or for the adrenalin high that comes with shopping anticipation.

These are not bad or wrong behaviors or feelings but they only work temporarily to make you feel better and they can dilute your power and productivity. 

Weight and money issues are self-esteem issues. Insecurity and the advertising industry drive the multi billion dollar dieting industry, pressure women to have more clothes than they can wear, purchase designer bags and shoes, and develop wasteful spending habits. I'm not saying it's not fun to spend money, but to take charge of our money women need to be very MINDFUL of what the energy it takes to earn money and where their money goes. 

Here are some questions to think about:

    Guesstimate how much you've spent in your lifetime on dieting books, videos, products. (Don't include gym memberships you actually use for health or fitness).

    What's your annual budget for clothes?  If you don't have a budget or know how much you spend you need to.  Guesstimate  how much you really spend each year on clothes, purses, shoes, jewelry.  How much of this is is a need or a want?  How much of the dieting or spending is to distract yourself from anxiety or emotional upset?  Remember what Peggy Gardiner, the Organizer said:  A shopping need is to replace something worn out, a want is anything else.  (I think that's a little stringent, but good to think about.) I hope this fuels some thinking & discussion.

If you're in business for yourself how much do you invest each year on education, self-improvement, business or financial education compared to what you spend on dieting or clothing?  Be honest and gentle.

Women - Put Your Big Girl Money Pants On!

Do you stick your head in the sand when it comes to your money problems? It's a common tendency. We think we can make something go away if we don't think about it. This is magical thinking which is how children operate. It's sad to say that sometimes we grown ups are so afraid of our financial circumstanceswe treat our money like a child would.  I get it - I have been there done that. But, it's time to put your big girl money pants on and look at exactly what's happening with your financial situation.

First, face the fact that your money problems will not get any better until you start dealing with them. Second, look at exactly what your bills are and your income. Then define your options. For example, a woman I spoke with this week has overwhelming credit card debt - not unusual these days.  I advised her to see a bankruptcy attorney to get advice about whether filing is in her best interest.  Another women I spoke with is just barely putting food on the table and she has teenagers that want new clothes. Understandable, but.... Teenagers can be part of their own solution. Don't give them all the gory financial details but let them know there isn't money for extras and if they want new clothes they can babysit, (I printed out flyers and distributed them in my neighborhood when I was 15), or yes, even work at a fast food restaurant. 

Women are smart, creative and full of incredible potential. If you know of a woman that's really good with her money, ask her to give you some mentoring help or support. Read to increase your awareness about how you feel about money, what your behavior patterns and beliefs are that support or limit you, and to know how to manage your money. Books I recommend include Suze Orman's Women & Money, Lynne Twist's, The Soul of Money, Deborah Price's Money Magic and Chellie Campbell's The Wealthy Spirit.  We women have got to take care of ourselves and taking control of our money is an important way to put those big girl pants on!!

Can Women Save the Economy?

Remember Rosie the Riveter from World War II? Six million women strapped on their boots, learned a new skill and went to work building everything from ships to planes. Does the economy need that kind of determination, focus, creativity and strength now? 

This economic time is an opportunity for women to really step up into their own power. Women are super busy and often reluctant - "who am I to run for office, try for a management position, believe I can make $100,000 a year or more?" Women collectively struggle with self-worth and it shows in our expectations and our paychecks.

Right now America needs women to take the promises of the 70s feminist movement to heart and express those ideals in a very bold 2011 manner. Women can save the economy by starting businesses, (More women than men are today) and by hiriing other women and by applauding and supporting successful women rather than bashing them. Women can save the economy by making more money and encouraging other women to make ore money. And, as I shared with my cousin Kim Kelly (K2Sells.com) who is a powerful woman and making plentyof money, by giving back to other women through donations and giving a leg up. For example, if you live in the Central Valley, the West Side Women in Action Business Conference is Friday Oct 7th (www.wswia.org). WSWIA gives money for educational scholarships for girls and women in the Central Valley. Still accepting scholarship applications, by the way.

Kristen Gillibrand, a rising star in Congress, mother of two believes it is vital that women's economic potential be unleashed to bring the country out of it's economic malaise. "If women earned dollar for dollar what men do," she says, "it could raise the GCP by 9%. This affects every American family."

Supporting other women is not about not supporting the men. But, here's the thing - women have only been in the workforce in the numbers they are today, since the 70s. We're playing catch up financially, politically and in the corporate world. There is still a glass ceiling and when a woman breaks through, it's so important for her to mentor other women up the ladder. Every woman we mentor, support or encourage sends a message that women are valuable, worthy and important.  (*From USA Today article "Skilled, savvy women can rescue our sagging economy, Gail Sheehy, Passages author 8/23/11)

Modesto Short Sale or Foreclose? Which Should You Do?

California has been hard hit in this "great" recession but Modesto, in Stanislaus County ranked at the bottom, the very bottom of the just-released Brookings Institution analysis of homes in danger of going into foreclosure. Since the recession hit over 69,000 homes have been lost to foreclosure. Most of the new defaults are B of A as they're playing catch up on lost paperwork.

I know many people in our area, like you and me, that in normal times pay their bills promptly and are mortified they can't do so now. This embarassment or shame about not being able to make their mortgage causes people to delay taking action. Job loss, lost income, huge credit card debt (debt is our responsibility) and being upside down on their loans, (53% of residential properties in Stanislaus and San Joaquin are) can lead to avoiding the whole issue, but that is dangerous for your long term financial health.

The question for those of you that are in default is what is the right choice - short sale or forelosure? Here are 3 things you need to pay attention to:  1) Don't stick your head in the financial sand and ignore the fact action will need to be taken on your mortgage. If you do you could be forced into foreclosure. 2) AShort Sale will harm your credit for approximately 24 months as opposed to 7 years for a foreclosure. California is a state that cannot go after you once the short sale is complete. 3) Make sure you hire a Short Sale expert with a track record of closes and I recommend Kim Kelly of K2Sells. Kim is in the Palm Desert area, but handles short sales throughout California. And, she doesn't just handle them, she CLOSES them and has been doing so for 3 years.

Financial Enlightenment: Creating Fulfillment with Your Money

"Never use money to measure wealth," is painted on the beautiful sign my sister Lane has in her yard. Lane is a talented, but "starving" artist who is in touch with her soul and with nature - whether bugs or animals and she allows her spirit to express delightfully in her jewelry and paintings. For the most part, she enjoys her life, limited means though she has.

Contrast Lane's world view with the person who works just to "make a living" or as author Vicki Robin of Your Money or Your Life says, "make a dying." I see the appeal of my sisters lifestyle. How many people end up in jobs or careers that they hate, but can't/won't admit it and do something different because the money is good. 

How do we measure wealth if not by money? Think about what wealth really means to you and how do we bring a more soulful relationship to our money? Originally money was a place holder or method of exchange that replaced bartering. Now as Deborah Price, author of Money Magic states, "we have given money such power that it permeates every part of our existence."

It's time to redefine what money means to us. We get so driven by making a living, or success that we lose sight of what's most important. I see this shift happening when for example, a friend lets go of overcommitments and focuses on her family and health instead. We need a new understanding of money that wakes us up to our deeper nature and connects us with our spiritual self. We need to respect money, but not make it our God because it's not money that's our problem but how we have defined it. Long ago we created this idea of money, but we have forgotten that. It's time to take our power back and create a new definition that utilizes our heart as well as our head. As we "deepen our relationship with our soul and bring it to bear on our relationship with money" we will experience the inner and outer abundance that is true wealth.

Unfinished Money Business: If Nothing Changes, Nothing Changes

If you struggle with money problems you're not alone. Don't just blame yourself, your spouse or your parents though, do something proactive. Because if you don't, you'll find yourself in the same place in a year or 5 or 10. If you're having the same issues with money you've been having for years it's time to look within. What do I mean by that? "Inner work" consists of taking the time to be introspective, ask yourself questions and listen for the answers. The old saying, "All the answers lie inside you," means that in order to access your inner wisdom you'll need  to give yourself time to explore. There is no right or wrong way to do so. Here are some suggestions to get you started.

Unfinished money business are the patterns, habits and convictions that get in the way of our financial health and well-being. We all want to have financial peace of mind, but we don't necessarily know how to get there. As a therapist and Certified Money Coach who struggled with money for years with my own money issues I love sharing what's helped me to develop a healthier relationship with money.

"The Apple Tree Exercise"  (From Mind Over Matter by Brad & Ted Klontz). Bring to mind an image of your mother or most important mother figure. On a piece of paper list 3 or more adjectives that describe your mother's behaviors around money: generous, impulsive, stingy, for example. Then list 3 or more things you can remember hearing her say about money and how it worked: "Nothing's too good for you," It's only money," etc. Write any beliefs she had about money. As you think about her background and money beliefs see if you can pull out the "money scripts" she lived by. For example:  "Money can be used to show love and to exert control." "Money's less important than having fun and enjoying life."  Do the same for your father or father figures.

Then go back to the adjectives that describe your mother/father and circle any words or phrases you believe are true about you. If you're up for it, ask someone that knows you well to check the lists and words circled for feedback.  As you can imagine, this "Apple Tree" exercise is designed to help you see how your money beliefs, patterns or habits didn't necessarily fall far from the parental tree. As you gain true inner awareness of your relationship with money when you make changes such as starting a retirement account, developing an emergency savings account, these behavior changes will "stick" better. 

Money Lessons 101

What kind of financial education did you get as a child or young adult? For most of us, it's the school of hard knocks and we make lots of money mistakes by the time we're thirty or fifty. Those of us that are smart take a class or read a few books about money. But, reading a book or taking a class doesn't get at those unconscious or below the surface memories, that fuel our money problems. 

When we're children we observe what's happening in our families around money and make up stories to understand and make sense of what is going on around us. Unfortunately, this is not the best way to comprehend the world of money. The Iceberg theory states that 10% of our mind is conscious and the rest is subconscious or under the surface. When your money buttons get pushed and you react instantly - for example, when your wife comes home with a shopping bag from the mall, but hasn't paid the bills yet, that may plug into a childhood memory.

To understand more deeply your current relationship with money takes some exploration. Deborah Price, in her book Money Magic, describes the Mother/Father Mirror Exercise. She suggests you get into a relaxed, "stream of consciousness" state (sit quietly, take a few slow breaths, relax) and allow pictures or images to form of your parents or guardians. Start with your mother and as you get a clear image of her make a list of characterstics, energies or attitudes you attribute to her around money. Then do the same with your father.

Now, gently ask these questions:  Which parent do I most mirror in my relationship with money? What aspects do I consider positive or negative? Which characteristics do I embrace or appreciate?  The negative characteristics are often the unconscious money aspects we either deny or avoid. They're also the ones we tend to most react to in our partner. How can you allow this new awareness to help you in your current money situation? As we gain new insight it can soothe financial stress and lead us into transforming our patterns, habits and beliefs with money.  

How Much Money Is Enough?

(Note: See Thursday for how your parents relationship with money affected your $$ decisions.)

How much money is enough to make you happy? We work to make money. Why? To have a place to live, food to eat, for security, power, fame fortune, lots of reasons. But how much money is really enough? Most of us think if we made more money, we would be happier. Have you ever really thought about exactly how much is enough for you to be happy?

Take this money quiz by David Krueger, MD, author of the article, "Understanding and Revising Your Money Story."  

Give an immediate, single answer to these 3 questions:

1) My current annual income _______.

2) In order to ensure happiness and contentment financially, with no more money problems and worries, my annual income would need to be ________.

3) What money means to me: __________.

If you're like the 90% of the people that have taken Dr. Krueger's quiz you believe you would need to earn twice what you're currently earning to "be happy and free of money worries." Dr. Krueger also observes that those who then double their income free raise the limit so that happiness continues to remain out of reach.

How about the answer to question #3? Many report that money means power, freedom, happiness, security. We attach a lot of power and fantasy to money, which is something originally created just as a means of exchange. 

If money really equaled happiness wouldn't the rich all be happy? But research shows some rich are happy and some are not. I've known quite a few who are definitely not happy. Different money struggles - for example- many struggle with guilt about having money their parent or grandparents have earned and that they now live off of from a trust. Here's an interesting tidbit a friend who worked as an estate manager for the wealthy shared with me. Peggy said the rich see money as power and the working/middle class see it as security. 

Money is a means to an end. Money is the vehicle we humans have given the power of exchange to. We forget we made the concept of money up. If we want more of it we have to be willing to do what it takes to create it for ourselves. And, to be conscious of why is it I want more? Another question:  Is having all the "stuff" you want really going to make you happy? Is it the quest to get there that makes you happy? Take some time to explore these questions:  What does happiness really mean for me? What am I really searching for? How do I create fulfillment and purpose in my life?