Crash, Cope or Change

When it comes to managing anxiety or stress during difficult times many of us have developed a huge trunk full of coping skills. We can take a walk, drink a beer, call a friend, turn up the music, write in our journal, pray or eat chocolate – sometime lots of chocolate.

Some of these strategies work better than others and some have unwanted side effects; but it is important to understand that even our most trusted strategy only provides temporary relief of the symptom and does nothing to solve the underlying problem.

If the stress is temporary, choosing to handle it with a coping strategy is reasonable. However, using coping mechanisms to avoid the needed change can be very destructive.

Take for example my friend Kate. Kate brings home $560 a week. Kate’s obligations total $595 a week. Dear Kate is strong, she has excellent coping skills, and she manages the stress of never being current on her bills really well, almost all of the time. ¬†Every once in a while things stack up and Kate starts feeling hopeless. She often chooses this time to vent to a friend. She sometimes even asks for advice when she is feeling this way but in her condition, she can’t hear the recommendations given.

Kate’s coping skills are over-developed. In a lot of ways she would be much better off if she just crashed. Crashing is all about humility. Humility is NOT about weakness, it’s about open mindedness.

Sometimes it takes the repo’ ed car to bring about the humility necessary for a person to change their money behavior. Sometimes all it takes to “crash” is to hear the right words at the right time.

We’ve all resisted the hearing of the truth about something. Maybe it is/was a bad relationship we just couldn’t let go of or the fact that our career path has led to a dead end or that we are destroying our tomorrows by living beyond our means today.

Whatever your unheard truth is, maybe today is the day to let go of your coping mechanism and really look at the underlying problem. Pray for the strength and humility required for change.

 

Sometimes it just sucks

It sucks when you are fighting and scraping to get out of debt and your company cuts everyone back to 35 hours. It sucks when you have finally gotten back to a balanced budget and your share of the health insurance premium goes up. It sucks when you are trying to make your 401K last and it loses 8% just since the beginning of the year.

The path to financial freedom has not changed direction; we still must spend less than we make, but for a great number of people that path has become much steeper. If you are one of these, it is very discouraging to hear the candy coated lies that many are dispensing as advice.

Skipping your morning Starbucks when your pay has been cut 20% is NOT going to solve the problem. In a better economy, a focused, determined energetic adult found it easy to pick up some side work. Today in many locations, this is simply not the case. Finding a part time job can be very hard and if you can find one, it’s often at minimum wage.

Lately I have seen a rash of honest hard working people who have not received what they were promised. The home that they struggled to afford has become worth half what they paid for it. The job that they’ve given their all to has cut their pay (in actual dollars or in reduced benefits) or their hours. Their college education, often financed, does not get them a high paying job. Their investments fail to provide peace of mind, bouncing wildly on an almost daily basis.

The luckiest of these people will be those that are the quickest to recognize the fundamental shift in their personal economy and react accordingly. It is natural to grieve a job, home or income loss. Acknowledge that grief, find someone to confide in and get to work on accepting your new reality.

Lifestyle Creep

Like kudzu on a hill side, lifestyle can silently grow, stealing resources and killing dreams.

Think back to your last raise or windfall – what do you have to show for the money?

You used to pay 6.2% of your pay in social security taxes, this year you are only paying 4.2%. What have you done with that 2%?

If you have recently paid off all your debt, good for you! Now, what will you do with that new “found” income?

Chances are if you don’t make a conscious decision about what to do with it, it will just slip away. It’s not that you are weak or stupid or irresponsible. The reason it will slip away is because there is a whole world of really smart marketers working day and night to conceive ways to separate you from your money.

In 1950, the average size of an American home was 963 sq ft. In 2004 that average size had grown to 2349 sq ft. while the size of average family decreased from 3.0 to 2.6.

How is it we could once be happy with so much less?

For most people housing is their biggest expense. That expense includes many line items that increase as the size of the home increases including; rent or mortgage, utilities, maintenance, taxes, insurance.

When you have more square footage, you tend to fill it up with furniture, toys and appliances. What would your life look like if you lived smaller? Could you travel more, work less or stay home with the kids?

Maybe your kudzu is not your home; maybe it’s eating out or the car you drive or the toys you buy. The point is: you need to re-examine the ways your money slips away instead of helping you move closer to your dreams.