Thursday, March 4, 2010

like no one else

I’m trying to decide how likely it is that I will have a heart attack by the age of 30. Sure, I’m not over 65 and I don’t smoke and I don’t eat refried pork fat for breakfast…but I’m starting to feel a familiar squeezey feeling in my chest this morning – and it’s gotten me wondering how susceptible I am to this kind of physiological failure.

Reasons for current heart strain: largely stress related.
Reasons for current stress: the permanent lines I just drew in my budget, and the long financial road I have ahead of me.
Reasons for heart strain in previous years: finance related stress
Reasons for finance related stress in previous years: I am a dumbass a product of my debt-loving culture. I fell for all of it.
Which brings me back to: the current budget.

A few weeks ago, I started taking a finance course, called Financial Peace University (FPU). When I first read the course name (early last year) I actually laughed out loud: “Financial Peace!?” I guffawed. And then I kept saying it to myself over and over, and without warning, Financial Peace became I dream I dreamt of often. I then decided that maybe this dream could actually be a reality. Financial Peace. Aah.

The course was created by a man named Dave Ramsey – a self made millionaire twice over. Why twice over? Because the first time, he was young and made poor choices with his money, and went from being well-well-off to very-very-broke in a very very short amount of time. The second time, he started paying attention; he learned things on purpose, he created new habits, he decided to be smart with his money (instead of pissing it away mindlessly, like Big Bad Culture tells us to). He started to look at how the rich spend their money, how they save it, how they invest it. How they keep it. What he found, after a few years, was that the information he was digesting, sorting through, and absorbing, was SO DIFFERENT to what everyone else was telling him (even a large percentage of “financial advice" books were off the mark). The reason he stuck with his findings was because he wanted to change his family’s financial future. He did just that. His book, The Total Money Makeover has been a bestseller since its publication date. He’s given millions of people advice on money through that book (and others) and through his radio show – and he has helped the same amount of people become (wait for it)….DEBT FREE. Permanently.

FPU and the principles within have completely shifted my financial paradigm – it has changed the way I think about money, spending, saving, and debt. It has taught me that budgeting is not only valuable, it is ESSENTIAL. Not only is it essential, it actually brings FREEDOM (unlike the popular myth that budgeting is for tightwads and people with no friends).

So, why the heart attack?

Untangling any financial mess is challenging, but what we often forget is that we can’t “quick fix” something that we didn’t “quick create”. Righting a wrong that took 10 years to create is a new kind of daunting, in and of itself. I suppose the pressure I’m feeling in my chest is the challenge of a million questions; questions that all relate to strength, courage, ability, and hope.

I’ve always felt the most at peace with my decisions when they are different from the norm – perhaps it’s an addiction, but I like to be different. I like to challenge the status quo and play devil’s advocate. Unfortunately for my family, friends, and you dear readers: this trend is only going to solidify as I continue this journey to Financial Peace. What I’m learning about money, spending, saving, and debt is THE COMPLETE OPPOSITE of what the majority of you have been taught. I know this because I am a product of the same culture you are, and I am being pared down to my naïve financial bones each week I attend my FPU class (it’s oddly disconcerting). The conversations I have had with friends & others since I’ve started this course have proven to me still further that none of us really know what we’re doing when it comes to money.

One thing Dave mentioned in our last class was that if you tell a lie often enough and loud enough, it begins to be accepted as the truth. For example:

Myth? Getting a bank loan, credit card, or financing a car (or boat, or TV, or clock radio) can be useful tools to help you get out of debt and/or manage money wisely.

Truth: That was most definiltey a myth. Borrowing money is not smart.You can NOT get out of debt by going into debt. If you are in a hole, you don’t dig out the bottom to get out of it! You only get yourself deeper! You climbclimbclimbclimb until you are out. For some reason, however, we’ve been taught (and actually believe) that getting out of debt requires getting into debt first. Here’s a fun fact: -Total U.S. consumer debt (which includes credit card debt and noncredit-card debt but not mortgage debt) reached $2.56 trillion at the end of 2008, up from $2.52 trillion at the end of 2007. (Source: Federal Reserve's G.19 report, February 2009). Do you remember what happened in 2007? The Recession. According to that statistic, our unmanageable debtload was “fixed” by getting into more debt on a personal level. Ay yi yi.

Truth: Debt is a PRODUCT. It’s sold to you for the financial benefit of the seller (not the other way around, as advertised). Another fun fact:

Profits or Losses at Top 10 U.S. Credit Card Issuers in 2008
1. Chase: $780 million profit
2. Bank of America: $520 million profit
3. Citi: $530 million loss
4. American Express: $850 million profit
5. Capital One: $1.00 billion profit
6. Discover: $710 million profit
7. Wells Fargo: $990 million profit
8. HSBC: $520 million profit
9. US Bank: $1.07 billion profit
10. USAA: Not listed
(Source: Nilson Report, March 2009)

These statistics are “American”, but this does not by any stretch of the imagination disclude Canadian Credit Makers from this reality: they are making money off of you. They are selling you a product. And we are begging them to do it.

So what’s my point? My point, I suppose, is not to believe everything you hear from your banker or your car salesman or the guy at the furniture store. Getting into more debt will not get you out of debt. Financing is stupid. Borrowing money is not smart. The only way to get out of debt is to stop spending more than you make – plain and simple. If you are drowning in debt, the only way to get out of that debt is to swim to the edge and get out of the pooldon’t add more water!!!

Unfortunately for me, I’ve already got an Olympic Sized pool in my backyard. These flimsy water wings have worked for a time, but they are starting to deflate. Thankfully, I am just now figuring out how to get to the edge…before I can climb out and leave that pool behind me for good!! To do this, it's going to take a lot of work, a LOT of self motivation, and probably a few rants along the way. Dave's famous mantra applies here: live like no one else, so later you can live like no one else! I am proud to announce that one day, on this very blog, I will proudly announce that I am financially better off than all of you.*

aaaaaand…. GO!

* I kid, I kid....sort of.

1 comment:

Victoria said...

When we first got on our spartan budget there was this oppressive weight on my chest - but I just kept putting one foot in front of the other and now I don't give it a second thought most of the time. It helps me to think of it as a challenge or an adventure - like a game I am slowly winning one choice at a time...
I salute you for walking against the tide!