by Larry Wiener
“Look at all that I have,” George (not his real name) boasted to me. “My income is below the poverty line and I have two late-model cars (on payments) and a four bedroom house (for which he is only paying interest rather than building up equity). Pretty amazing.”
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“But you are building no financial base,” I answered. “You are only one disaster away from losing it all.”
He had no answer.
What was amazing to me wasn’t so much all that he has, but that a middle-aged, well-educated man would not understand the value of a financial base. Even though he was unemployed when we had this conversation, he was still looking at bigger houses to buy and hoped to start that process the moment he landed a job.
I guess I shouldn’t have been amazed at this story. All over our nation there are individuals and families with large houses, garages full of expensive toys, including adult toys on payments, and no financial base. Many are one setback away from disaster.
When I shared this story with my friend Carl (not his real name), he said that it was easy to envy people like George. Carl was a recovering debtaholic at the time and had made great progress toward straightening out his and his family’s balance sheet. He wasn’t there yet, but his progress was rapid. He was having to die to, or at least postpone, his dream of buying a boat.
If you have read the columns on this site, you know that all of us emphasize building a financial base. You start by getting out of credit card debt and other enslaving consumer debt, then building a reserve, and then becoming a saver and investor.
Sounds straightforward and doable. So, I ask myself, why don’t more people do it? Sometimes there are genuine financial setbacks (jobs lost, cars dying, etc.) that get in the way, but not usually. Why do so many earnest, intelligent people that I know lapse back into debtaholism before they gain control?
As I was thinking through this, my mind went back to a sermon I heard several years ago in which the pastor said that you have to learn to be content. Further, many people who are not in financial control tell me that their self-esteem is down and that making a purchase at least gives them a temporary feeling of well-being.
Contentment does not come naturally to us and the advertisers out there know it. Every time you turn on the radio or TV, someone out there is telling you that you deserve this car or that trip to a fancy hotel. The images are gorgeous and the words are purely set up to make you buy.
So let’s say you’re in the twin prison towers of financial weakness and low self-esteem. Besides the usual financial steps (cut up the cards, use coupons, try to get your interest rates reduced, etc...), what are some steps you can take to deal with the emotional side?
Here are a few suggestions:
Be grateful for what you have. Most of us in this country have plenty, materially and otherwise. If you sit down and think about it, you probably have more to be grateful for than you would think at first.
Stay away from situations that bring on discontentment and tempt you to spend. When my friend Carl was having to die to his dream of the boat, the last place he needed to be was at the marina. He didn’t need to look at boating magazines or be around people who talked about boats all the time. Think about what situations tempt you to buy. Is it watching certain television shows, or commercials? Is it being around certain people? To the extent that you can, stay away from the situations that tempt you.
Make a plan and keep track of your progress. If you are not in financial control, make a plan to get into control. It could be eating out less and putting the money toward debt. Then, as you make progress, keep track of it. If you are paying down credit cards, for example, you may want to keep your monthly balances in a notebook so you can see them going down.
Look for inexpensive recreation. Working hard without any restorative activities is no good, but is especially destructive when you are broke. Look for ways you and your family can enjoy life without spending big. A visit to a local museum accompanied by a picnic may work for some families. Some couples I know who are trying to save money have enjoyed board game nights.
Don’t suffer alone. In a recent column, I wrote about three couples who are planning to invest together and are finding inexpensive ways to enjoy together.
Look forward to better days. Carl and his wife are now in control of their finances. They take regular vacations and have two late-model cars. To get there, though, they had to do without a dryer for six months when theirs broke while they were paying down debt. The sacrifices you make will be worth it.
If necessary, get professional help. Consumer Credit Counseling Services has helped many individuals deal effectively with their creditors and Debtors Anonymous provides a twelve-step program for those enslaved by debt. Building a financial base is one of the most important keys to financial well-being. It starts with getting out of credit card debt, then building a reserve, and then becoming a saver and investor. Black belt shopping will help you free up the money to build that foundation. Our consumerist culture makes it difficult for many to have the resolve to do what it takes to attain financial freedom. If that culture is binding you, take a look at what you can do to move toward financial freedom and contentment.
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Copyright © 2004 by Larry Wiener. All rights reserved.