The top financial leaders and self-help gurus agree: it’s not about the money. If you dig deep enough, you learn that’s true. However… you just can’t explain that to yourself or others in a way that makes it stick when debt and hardship stare you in the face. When you live paycheck to paycheck as I do, it’s the cycle that keeps on giving. There’s no stress quite like the financial crunch. Give me flies, locusts, vengeful relatives, spiteful coworkers… anything but money worries. Stress creates further mental problems, which in turn manifests into physical sickness, and it just never stops of its own accord. When breaking the cycles of depression and anxiety, even temporarily, every little bit of stress that can be released helps. In my world, money is a four-letter word. In my family, it’s the measure of personal success. If you haven’t got it, you’re not successful. You’re not even responsible. That becomes a self-fulfilling prophecy after awhile because you start to believe it.
“I don’t believe in the no-win scenario.” — Admiral James T. Kirk, Star Trek II: The Wrath of Khan
I trust I’ll be forgiven for leaning on examples of pop culture as I explore my options. It’s what I know. Jim Kirk has been one of my greatest heroes for most of my life. I don’t have his sense of adventure or anything approaching his levels of self-esteem, but many of his fundamental beliefs and values are hard-coded into my psyche. The idea of the no-win scenario is one of them. We all face hard times. We all will confront death sooner or later. But until the reaper comes a-knockin’, I will continually look for the better way out of dark situations. As one who deals with anxiety and depression, I refuse to let my circumstances dictate my life. Problem is, it sucks you in. whether you like it or not, so in those times when these things don’t have hold of you, it’s important to take advantage of those times to do what Kirk would do: reprogram the simulation so it’s possible to save the ship. No matter how hard it gets, I still have some unfathomable trust that there’s always a way out. If I don’t see it, it’s because I simply have not found it yet. Why is it that I can maintain that level of bull-headed belief? Because money is a human-made construct. It’s powered by just such belief. By faith alone. It’s real only in the sense that we say it is. We see the fluctuations in the markets, and it’s all a result of confidence or panic. The “experts” ride the bubbles all the time, into the point of bursting, because they can’t predict these things any better than any of us regular schmoes can. Getting advice from them is a classic example of “Do as I say, not as I do.” And yet… it’s advice worth having because success in anything is a moving target. Learn the system, but adjust it based on your own risk assessments.
When it comes to money, I had to learn the hard way what the simulation really was before I could reprogram it. The message was that even though I’m gainfully employed, I’m still living paycheck to paycheck, and when depression hits, I would start going into insane amounts of debt over stupid crap. This means that not only does the interest mount, but in the event of an actual emergency or some manner of repair setback, the funds simply aren’t there. What message does this send? Sadly, it’s the one where you can follow all the rules society has laid out for us and come up short. It’s the one that, if played out to drastic conclusions, can end in crime, substance abuse, and/or death. These victims are the ones who bought in to the no-win scenario. I have nothing but sympathy, but at the same time, even on my worst day, I refuse to be them. Debt sucks. It’s the suckiest suck that ever did suck. It must be eliminated.
The first step for me in overcoming my cycle is to identify it. It’s a holdover from superstitious times that still holds some kernel of truth: before you can exorcise your demons, you have to name them. When it comes to evil, there is none so dangerous as the foe that wears the mask of good. So when it comes to figuring out your finances, there’s only one place to start: a complete line-item edit. Find out where every single penny of your paycheck is going. From there you can implement… the budget.
Duhn, duhn, DUHN!
Budget. That dreaded word. It sounds like some kind of prison sentence. It’s not. It is, in fact, your best friend and most powerful ally in a money crunch. If you’re in the Kirk role, think of the budget like Spock. The numbers don’t lie. They do sometimes exaggerate when the need arises, but not often. They are cold and logical, and they will inform you of the threats you face. And if you really listen, there will be suggestions for how to face them down. The budget is my key to saving the ship on the long term.
To make the budget work, my personal suggestion is to first acknowledge how much money you actually have to work with: paycheck, any bonuses or side hustles you may or may not have. Break out a spreadsheet and mark these numbers down along with when in the month they happen. Whether or not you think it’s enough is irrelevant at this stage. Don’t let emotion get in the way. Look at the numbers and the cycle they dictate.
Next, outline all of your actual expenses for the past twelve months. Why so far back? Because some expenses only happen once a year. This allows you to find them all. I recommend separating them into categories: mandatory, discretionary, and whimsical.
Mandatory expenses are the regular bills that you absolutely cannot live without. I’m not talking talking about the things you think you can’t live without, such as coffee or internet. I’m talking things like mortgage or rent, electric and gas, groceries… things like that. For me, living in the Dallas / Fort Worth area means that I rely on my car to get to work or the grocery store, so things like insurance, fuel, and regular maintenance are mandatory expenses.
The expenses in this category are usually the really high ones that no one wants to pay. I’d suggest flipping the mental script. What are bills if not an agreed upon exchange for a good or service you rely upon? Are you not glad to have that good or service? I know I’m thankful for air conditioning in the Texas summer, for example, so I’m grateful to pay that electric bill. I’m grateful for the ability to pay that bill. It sounds bonkers, I know. Let me explain.
This attitude of gratitude is important. Kirk vs. the computer is one of the great rivalries of modern fiction, and Kirk always wins. In order to reprogram the simulation Kirk-style, you have to understand the software and the computer you’re dealing with. In this case, the computer is your mind. You have the conscious mind and the subconscious mind. The subconscious mind will accept absolutely anything it’s exposed to as fact. Anything at all. It doesn’t care. Everything in its world is unicorns and rainbows until you program it otherwise. This is why kids have awesome imaginations, which we tend to lose over time. Thing is, that imagination is precisely the asset we need to cultivate to execute Kirk-level escapes when the chips are down. The part of the computer we face in our trials is the conscious mind. Think of this as the gatekeeper. It serves the function that keeps us from falling for anything. Problem is, it will accept nothing. If anything gets past it, it feels like it has failed and will become obsolete. If you feel like your job is threatened, don’t you double down to prove that you’re worth keeping? Of course you do. So does your conscious mind. It requires repetition and constant reinforcement to break past those barriers. But once you do, the subconscious find the new input and says, “Thanks!” When that happens, it sends some signal to you and to the universe around you that you want more of this. The reverse holds true too, which is why depression and anxiety are problems. After all, it’s not really paranoia if they really are out to get you, right? So if all you see around you is debt, you get more of it. But if you actively look for opportunity to escape it at all turns and are grateful to pay for the things that bring you value, your mind eventually accepts it and runs with it. There are lots of books and videos on this, and we can run through that topic another time. For now, we need only to get the basic point across. Money is a tool. You use it, or it uses you. Decide now which is the master.
When you study these mandatory bills, you learn quickly that some of them (like that electric bill) aren’t the same each month. Sure, you can do average billing, but I’ve discovered that you end up paying more in the long run if you do that, so I don’t bother with such things. The first axiom of budgeting is that your out-go must be less than your income. The best way I know is to mark the minimum of your income vs. the maximum of your bills. Plan every month like you’re paying that summer cooling bill, for example. This creates an operational baseline and generates some wiggle-room in the end for little things that will inevitably come up. You can always renegotiate those bills too. Find a provider for cheaper. Do some shopping. Ask around. Somebody knows the angles, and they are always happy to “stick it to the man” and pass their secrets on to someone else. These little victories add up to both dollars and self-esteem. Any credit card debt you have, put that payment in this mandatory category for now. We’ll come back to it before this is over.
The next expense category is discretionary. This is for the bills that aren’t vital to our survival, but they sure add value to our lives all the same. If it came down to hardship, we’d be letting go of these things temporarily: phone, internet, things like that. For me, my memberships to Audible and Netflix are in this category. Map it all out on the spreadsheet as you did before, along with the maximum price tags and due dates.
Next is whimsical expense. This is the completely discretionary stuff where, when the chips are down, you absolutely let go of these things first, even if it means upending your lifestyle. Are you eating out all the time? Do you drop extra money on lottery tickets? Or cigarettes? Or some other vice? I’m not judging here. I’m simply saying these aren’t the “hard” bills like keeping a roof over your head and your utilities active. They’re optional, which means you can opt out of them. Work to remove those first if you can, especially if there is a physical or emotional cost attached as well. For me, as stupid as this sounds, it’s toys, music, books… things of this nature. I believe it was Sir Thomas More that once said if you can afford two loaves of bread, buy one loaf and a book. Wise words, from a standpoint of education and edification. But don’t buy half a loaf and go on a spending spree at Half Price Books for the sake of “library building.” And did I mention they have music there too? The law I fixed for myself was that if I can’t carry it in the store, I can’t carry it home. I learned to carry a lot, and it cost me dearly in the end no matter how much I enjoy the purchases. I’ll discuss that in another blog later because I absolutely did that on a regular basis, which is part of what brought me to my knees on this stuff. It’s the same kind of logic that says that if you break a cookie in half, all the calories fall out. It just doesn’t work, and you will sound stupid if you try to explain that to anyone else. Don’t take my word for it. Try it out if you must. Prove it to yourself if it helps to reinforce how bad of an idea it really is.
[Note: it’s actually a Chinese proverb that says if you can afford to buy two loaves of bread, buy one loaf and a lily. This seems silly to me. I can grow a lily from seed. While I certainly see the value in the beauty of a flower, I’d rather have the book in most cases. I can visit an arboretum. I could visit a library too, but that’s a scary notion in my area and potentially the subject of a different post.]
There’s something about seeing hard numbers that seizes up a person’s whimsy responses and forces a moment of mental silence. Reality is a harsh mistress, you see. When you see how much the little extras in life add up, it creates a sense of disbelief and possibly even anger that ensures you’ll never be absent-minded about such things again. Makes it easier to jettison such expenses, let me tell you. These add up faster than you think, but then, so does the wiggle-room it creates when they’re not there. Extra cash, welcome to my life! I’ll discuss some options for making the most of that extra cash that I use myself before this post is over. Whimsy buys are rewards for down the line, only after everything else is paid. Before you can do that, though, there’s a gorilla in the room that has to be faced.
Credit cards. Interest is a viscious bitch and her yappy little puppies. You know it, I know it. We all know it. The credit card companies know it. They count on it. They’ve rigged that system to keep you as a debt slave. Yeah, I said it. A slave. It’s very tempting to get those introductory cards with 0% interest for the first year. I did that, but if you start juggling accounts, that works against your credit report just as much because they see what you’re up to. You fool no one. The numbers don’t lie, as previously stated. Ideally, a responsible person can have a credit card so as to build the credit rating and pay it off at the end of every month, but not all of us can be trusted with these little icons of powerful debt. I had a girlfriend who purchased a $900 laptop on credit. She paid for that laptop over seven times before the bill was free and clear because she was only making the minimum payment. But let’s say for now that we’re more responsible than that (even though I’m clearly not when I’m depressed). Emergencies happen to all of us, and it’s nice to have that card when disaster strikes. What then? You can’t pay that off immediately, and the cycle of debt kicks into place just as it happened to me. It’s a book or two here, a music album there, and then the car breaks down. A timing belt needs replacing. The alternator goes out. The transmission drops out the bottom of the car, and the whole car needs replacing. Anything can happen, and then the bill mounts. Meanwhile, I got into that cycle of depression, and I’d make myself “happy” with a new book or twelve, paying no attention to the couple of hundred of them sitting on the shelves, mocking me in silence because I’ve not yet read them. Then the clock runs out, and that interest payment balloons for all purchases past and present, and then on the interest you can’t pay too. And even if you don’t go for a promotional deal, the simple fact is that the more you charge, the higher the interest, and the higher the payment. Eventually it crawls beyond the ability to pay even the minimum each month.
Panic attack! Red alert!
This now becomes a medical emergency. Kirk calls in Dr. McCoy. You have to stop the bleeding, to stop the interest from accruing, and the only way to do that effectively is to amputate the alien parasite that is the credit card. Surgical removal. “Dammit, Jim, I’m a doctor, not a — oh… right.”
Debt consolidation is a possible answer. Not all of us are blessed with understanding family or friends that happen to be rolling in money. Heaven knows I’ve called on the “Bank of Dad” more times than I can count for emergency repairs or whatever, for which I’m grateful, and I always find a way to pay him back with interest one way or another. But it’s embarrassing every single time, which whittles down that sense of self worth, and it positions him into a point of power that, once ceded can never be reclaimed, so there are lines I simply cannot cross or let him cross. Sometimes I even luck out, and he’ll help me fix stuff without the need to call a pro, and I can pay him back by fixing his computer or something. But sometimes these things just aren’t an option because it will inevitably cross the line of good will into abuse, and you get into a bind regardless. Part of being an adult and reclaiming a level of responsibility is to find other options that will still alleviate the situation. It helps to discuss such options with people you trust. Not everyone is comfortable talking money, especially those of us at lower income levels. It’s a trait of the rich that they talk money all the time. Seems like maybe it’s for the best to suck it up and talk about it.
Sometimes a credit card company will “work with you,” meaning they’ll cut off the card, and they may even offer a payment plan at a lower rate. They also report it to the credit bureau and make all of their sucky options sound like they’re doing you a favor. Don’t fall for it outright, but see if you can renegotiate a lower balance for a quicker payoff. Explore those options. They will press for advantage and demand you make a decision on the spot. Tell them you’ll think it over and call them back. No shame in that. There’s a (wrong-headed) theory I’ve heard from many that says that if you pay them what you can in the moment, some is better than none. The card company will disagree after they take your good faith money, and your credit score will take a hit for late payment because it’s an incomplete payment. You might stave off that problem for a month or two at most before you bail on the payments and the collectors start calling at all hours to harass you. Not my idea of a good time. Worse still, maybe you scrambled to a payday loan shop and dropped that ball too, prompting some guy with a broken nose to meet you at your door. Or maybe I’ve seen too many movies and read too many pulp novels. Whatever. It’s hypothetical, so work with me here.
We live in a wonderful modern age of the internet. Instead of going to the bank to prove you don’t need a loan in order to get one, try a service where the banks compete for your business. I’ve had some great success in the past with accredited online lending services, where it’s not just banks competing, but also private investors. Compare these kinds of services against the Better Business Bureau and other consumer advocate groups and see what works for you. The idea is you get a loan with an interest rate that’s a bit uncomfortable, but less than anything the card companies will strap you with, and there is immediately an end in sight because it’s a fixed term loan. It’s auto-debit from your account each month. So as long as the money is there, you whittle your way to freedom each and every month. What I did was set the date of withdrawal (because you can do that too) for one day after the mid-month paycheck was deposited. I would personally caution, however, that if you don’t accept a loan, some of these companies out there will still keep your accounts active and not delete them. The law here in the States says you have to be on file for five years simply for making the request, and that’s fine and well. I work in a legal records department, so I get it. But the account can be disabled from the outside and thus not hacked nearly as easily. Some companies will not honor this request up front and have to be fought. You can win simply by being persistent. The law is on your side if you know your rights.
If you do get one of these loans, treat it like a utility, one of the mandatory expenses. Budget all utilities and necessities to come out of your check first before running the numbers on discretionary bills. Keep whittling this process down until you eliminate all you can or will from your spending. And if you’re able to eliminate your card by doing this… close out the account and cut it up into tiny pieces. It destroys not only the information on the card, and it feels really good to send yourself that signal of liberation. The chain is still there, don’t get me wrong. But it’s kinder to you in that instead of adding new links to it, you’re now in the process of removing them, one month at a time. Even better if you’re able to negotiate a smaller payoff amount on that card before you closed it. Again, there’s no satisfaction quite like the little victories that allow you to inch ahead.
If you’ve made it this far, you’ll find that wiggle room I keep mentioning, and you can breathe a sigh of relief. The worst is over, you tell yourself. You can do this. And you can. But it’s still precarious. Anything can still happen, and it usually does. You’ve saved the ship, but the shields are down and the engines are still crippled. Scotty is giving it all he’s got down in the engine room. Trust that he’s the best. You’ve done what you can, now it just needs time to work.
One of the things I’ve not yet implemented but will do in the next week is a savings account. These can be setup in such a way that when your paycheck is deposited, part of it can be redirected immediately into that savings. You never see it that way, and you can budget accordingly around the loss. If you get a raise, redirect the raise. The savings account builds over time, and with a little planning you can borrow from it for things like a vacation or some other reward. The longer you stick to your budget, the easier things become. It’s not a financial diet anymore, it’s a lifestyle decision.
I’m going to suggest some things I’ve done in addition to all of this that will sound counterproductive.
First, find a charity. Donate something, even if it’s a dollar per paycheck. I like to give to animal rights, civil rights, and independent musicians who make me happy with their tuneful efforts. My Amazon Prime account is linked to the Christopher and Dana Reeve Foundation. These sorts of things send mental notes to the universe that you have more in your wallet than you think, and because you give, you will get back in some way. Like the Beatles say, “The love you take is equal to the love you make.” Not just pretty words. It may or may not be how you expect, but it will happen. The concept of tithing is big in spiritual communities for this reason. The idea here is you give 10% to charity. Nature abhors a vacuum, and for every action there is an equal and opposite reaction. The space created in charity opens the way for more. It actually generates the proverbial winds of change over time. It shifts how you think and how you feel.
Second, reward yourself. No one is suggesting you go cold turkey on all the things that bring you joy. You certainly can’t tell a person with depression they can’t have joy. That’s just asking for trouble. You maybe can’t afford these little things right now, sure, but what about a month from now? Or two months? Be good to yourself. Set up a reward structure. When I reach a goal, I get to buy some music from my wishlist. I’ll appreciate that one album more as a result, guaranteed. While I’m waiting for that reward, it just so happens I’ve literally built a personal library for occasions just like this one. See how that worked? I expected the lean times, and I got them. I also got the tools to see me through them and even work past them. I will utilize both, and the lesson will be reinforced to ensure I’m never in this place again. If I find I don’t enjoy something in my library, or if it doesn’t bring me value, I can sell it.
Third, maintain the long game. You now know the situation isn’t hopeless. It sucks, but it’s better than it was. Much like waiting on Christmas as a kid, it’ll get there eventually. In the meantime, keep making cuts where you can, keep switching out services that try to charge too much, and always keep in mind the cost / benefit ratio of every decision. Budget your grocery shopping at cheaper stores. Learn to cook instead of buying ready made foods. Worst case scenario, there’s something to be said for simple soups, salads, and sandwiches. Take shorter showers. Bump the thermostat even one degree off what you’re used to. Plug energy leaks. Little course corrections make big differences in the long run.
As with the situation itself, these things are different for everyone. What I can promise is that if you are ready to do the work, you can dig yourself out. Find someone to help you figure it out if you feel you can’t do it alone. There is no feeling in the world quite like when understanding sets in. Money is an artificial construct. It is an idea powered by faith. When that faith fluctuates, you see the markets rise and fall accordingly. It works the same way in your own world. These days, everyone is all about the idea of the side hustle. For some, that works. For others, it makes it harder than it has to be. Know yourself in all things so you can make the decisions that will work for you. Where money is concerned, if you don’t know how to use it, it will use you. Credit cards are the perfect example of this.
My next phase in my financial education, now that the budget is outlined and the road to recovery is being traveled, is to re-evaluate my relationship to money and to the stuff it buys. I recommend Tony Robbins’ book Money: Master the Game as well as It’s Not About the Money by Bob Proctor. I went through both of these books earlier this year, and they helped tremendously to help break down some mental barriers and give me some new ideas. I intend to revisit them in the near future for reinforcement and deeper understanding as I ascend to new levels of competence. I’m currently reading Mind Over Money: The Psychology of Money and How to Use It Better by Claudia Hammond. I’m also working through the backlog of podcasts of The Minimalists, Joshua & Ryan. They can help me with some of my *ahem* collections, you see. I’ll be picking up their books via my Audible subscription in the near future as credits become available, but for now their site and podcasts are invaluable — and free — resources for changing my mindset on a great many things that got me into this mess.
Obviously, this won’t work for everyone, but this is how how I went about it to get this far. However I move forward from here is dependent upon this system I’ve put into place for now. Hopefully it’ll provide some inspiration to someone in a similar situation. Resources are available, and they are more plentiful than you might at first realize.
With the budget in place, the ship can limp along on impulse power until repairs can accumulate. It’s not easy. Nothing worth doing ever is. But I can speak from experience now on how good it feels to reclaim this personal power. Once the system is in place, it’s far easier to maintain it than you think, especially if you want it badly enough. And it’s only the beginning. Financial independence is truly a possibility worth pursuing.