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| Uncommon Sense | 3 steps to slaying your money demons
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If you're bedeviled by fear, confusion and denial when it comes to your personal finances, join the crowd. Here's your head start on an exorcism.
By MP Dunleavey
Editor's note: Columnist MP Dunleavey and six other women have come together online to strip away the myths surrounding money, lay bare their assets and liberate themselves from debt. Follow the quest for financial fabulousness of these "Women in Red" every second Monday in Dunleavey's column on MSN Money.
Ever feel like youre stuck in a money rut? You vow to do things better -- no more late payments! No more impulsive spending!
And it works. For 36 hours. Then you find yourself making the same mistakes over and over again, as if you were possessed by . . . A DEMON.
Except youre not. Sorry. The demon thing is just a metaphor. Still, your mission (and ours) is to banish these evil obstacles from our lives so we can enjoy some financial peace and prosperity, for petes sake already.
Know thy demons
How do you spot the little devil thats sabotaging you? Think of it as doing an anti-virus scan of your financial life. Youre looking for mental blocks, bad patterns, stalled action. Wherever youre not making progress, thats where one of your demons is hard at work, holding you back, tripping you up, making you feel like a financial loser.
Here are some classic demons the group uncovered in a week of weeping and self-disclosure. Theyre sneaky, theyre surprising.
Fear & avoidance: Im too terrified to talk to my husband about how much debt we really have. Weve shared our pay-down strategies but no real numbers. Is it any wonder our debt-reduction plan hasnt been working as well as it could?
Financial fatigue: Yalitza says that after years of ignoring the issue of money, now shes playing financial catch-up and often feels overwhelmed by the task of paying back her debt, planning her future, etc.: Managing your money is like having another part-time job. No wonder there are so many stressed-out people in the world.
Confusion: Anna jokingly nicknamed herself the Frugal Fannie of our group, but admits, Im frugal, but I dont manage my money wisely. She hates all the paperwork associated with money and often wishes she had mastered a money management system. Nobody ever taught me how to do this.
Bad habits: Carole is the only six-figure salary in the group, and yet she confesses that her worst fear is ending up in poverty. She knows she could be saving more, but finds herself treating friends to dinner and using the ATM as if it were a spigot.
Anger & resentment: Beth is preoccupied with her parents money mistakes. Ive been worried about my parents finances (particularly my Moms) since I can remember. This prevents her from devoting her full energy to the life planning thats a priority now that she and her husband have a baby daughter.
You may contend with other demons: guilt, denial, co-dependence, depression. But in order to banish the nasty pattern thats your nemesis, you need to do three things:
Step 1: Give your demon credit
Its sounds strange, but your money demon probably started out as a way to cope with some other feeling, says Mary Durie, a financial planner with Quest Capital Management in Dallas.
Case in point: Durie understands Beths frustration at her parents fiscal irresponsibility but thinks its more about self-deception. Beths parental preoccupation gets her . . . nothing. Shes focusing on her parents more out of denial about her own situation. Shes misusing her energy.
Its not Beths responsibility to control her mothers money, Durie continues, suggesting that Beth instead channel her energy into examining her own financial goals. In contrast to her angst about her family: She might be pleasantly surprised to find that shes doing better than she thinks.
If spending is soothing or avoiding bills helps you to stave off stress, maybe its time to find other ways to cope. And keep reading.
Step 2: Examine the irrational
Financial dilemmas also arise because youre telling yourself something thats not necessarily true. But youve been repeating the message for so long youve gotten your own wires crossed.
Case in point: Carole is so afraid of poverty, she tells herself she could end up on the street. Even Carole acknowledges that this terror isnt rational. But it haunts her and prevents her from really looking at her spending, her savings and her goals.
Being irrational about money is something many of us do; theres no shame in it. But its important to analyze that illogical mindset in order to change it. When Carole was 10 years old, her father died -- and her suddenly single mother had to raise four children in strained economic circumstances.
In talking about that tough time, Carole realized how much anxiety and uncertainty she absorbed -- a feeling that her financial security is never really secure.
Sometimes it helps to admit the irrational money ideas youre inflicting on yourself (Im not good with money. I will die if I know how much debt my husband has, etc.). But you also need to take concrete steps.
Carole needs not a budget, but a spending plan, Durie believes. She should allot X amount to going out -- and allow herself to spend just that and no more. (Using the famous 60% solution budget," that would be 10% of her gross income each month.) By putting parameters around her disposable income, Durie says, Carole will begin to rein in her fear of poverty, while feeling more in control of her spending.
Step 3: Look at the bigger picture
Yalitza, Anna and I are victims of a certain ugly gang of demons. Lets call them the DFP -- Demons of Financial Paralysis: i.e. fear, avoidance, confusion, procrastination and denial. These are ways we dont move forward with vigor, says George Kinder, a financial planner and founder of the Kinder Institute of Life Planning.
To combat the DFP, Kinder says, you need to tap into whatever gives your life meaning -- whether its your family or playing jazz guitar. Only by keeping your eyes on the prize, as he calls the bigger financial picture, will you find the energy to move forward.
Kinder says that when youre not passionate about your life, when your life goals are indistinct or you feel like youre working for the man as opposed to working toward whats most powerful in your life -- DFP attack. And we stall! he says.
To rekindle that momentum, ask yourself some challenging questions: If you had all the money you needed already, what would you do with your life? If you had only 24 hours left to live -- what would you regret, miss, wish you had done?
Once youve reconnected to some of the meaning in your life, link the money to that prize, he says. Meaning: Dont say, I cant do X because I dont have the money. Say: I want to do X; how do I structure this financially?
Of course if youve suffered from years of the DFP, this takes time -- and practice, Kinder emphasizes. Patterns dont change overnight.
Just grit your teeth and go
In my experience, beating a money demon requires one more thing: Persistence. Undiluted elbow grease, distributed in small doses on a big problem over time will do more to move you forward than the most heroic of Herculean gestures.
I decided to take my own advice and address the question of my husband's mystery debt:
First, I finally admitted that my money demon -- not wanting to know my husbands true debt -- was providing false peace of mind.
This was an irrational fantasy, no doubt left over from the fact that my parents never talked about money and they seemed to cope just fine. Not.
Once I admitted it was irrational, well, I had to do something. Our bigger picture demanded it. We want to be debt-free so we can afford a better life. So I sat down, gritted my teeth -- and asked him. Although our husbands' finances are given immunity in this column, I just want to say that the revelation was shocking. And yet a relief.
Knowing now exactly how much debt we have, instead of how uncomfortable it is to keep my head in the sand, caused us to rethink our debt payback plan and make a new one thats far more aggressive.
One demon down -- 12 million to go.
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