Monthly Archives: June 2016

Learn More About Financial Commandments

download-21When I first started my blog (nearly a year ago!) I had a page that was dedicated to my “financial commandments.” They are the rules that I try to live by and the ethos of this blog. After redesigning the website a few months ago, I realized that they had gotten lost in the shuffle.

The “commandments” were the reason I decided to create my blog and the guiding principles with which I try (and sometimes fail) to live my life. (J. from Budgets Are Sexy was also kind enough to feature the on my favorite blog ever—his own!)

A lot has changed in the 8 months since I wrote them: I paid off my debt, I learned  am learning how to be kind to myself, and I’ve made somebig life changes. But somehow, the “commandments” still ring true.

So without further ado, here they are:

1. Avoid Waste

99% of humans are wasting insanely large sums of money. Don’t be one of them

2. Only spend money on things that truly make you happy.

If it doesn’t make you happy or make you a better person, don’t even bother opening your wallet.1

3. Learn what happiness actually is

…and what it isn’t.

4. AVOID ALL FINANCIAL EXTREMES.

Never sacrifice important things like your relationships or self-care in order to get ahead financially. Instead, ignore societal norms and cut out pointless expenses. Never save money to the point of misery or spend to the point of excessive. Binging and purging is unhealthy in both eating and spending.

5. Debt is evil.

Dispose of it immediately and never take out loans again.

6. You can do anything you set your mind to

…even if it is not the norm or seems hard.

7. Saving money will make you1 happier than spending ever could.

8. Life is short and fleeting.

Financial freedom is about creating a life that allows you to focus on the things and people that truly matter. Never lose sight of those things (and people) as you work towards your goals.

Personal Finances On Monopoly

A little over a year ago, I wrote the post “Monopoly and Debt Repayment“. In it, I lamented my losing streak against DD3 who, I was certain, had poor strategy in the game. An overly safe player, DD3 would choose not to buy properties she landed on because she stubbornly insisted upon keeping a good stash of cash. I, on the other hand, would buy every property that came my way – in the name of future wealth-building – and I’d usually have a full two or three sets before she had even one.

But when the time came for me to put houses on all of my properties, I couldn’t afford to. And if I could, I’d max out – always cash poor. Meanwhile, DD3, on her one measly set of properties, would slowly build up her houses – always maintaining what I considered to be an unnecessary amount of money just in case bad luck came her way – until she eventually traded up for hotels.

You know the rest. If she happened to land on one of my various properties, in its house-less or only-modestly-housed state, she would easily pay me the small sum owed. When I landed on her single set of hotel-ed properties, I’d have to mortgage some of my own and/or sell off a few of my poor houses just to make the payment. Until I lost.

And what have I learned?

You’d think that over a year later, I’d be equipped with a better Monopoly game plan. You’d think I would have mastered that balance between building up savings on the one hand, and investing in future wealth-building opportunities on the other. I got some great comments after that original Monopoly post. One, from my friend Laurie included some soundbites she remembered from her father, a successful property owner:  “‘Over expansion ruins many a successful business’ . . .  ‘Never bet more than you can afford to lose; “Never spend your capital.’”

Alas, I am still guilty of over expansion when I play Monopoly. I continue to bet way more than I can afford to lose. I consistently put myself in the position of having to spend my capital.

DD3 enjoyed a resounding victory this past week-end when we played a game. Early on, as I bought property after property, she became a bit worried. The toss of her dice brought her to spaces that didn’t offer the chance to buy, and then she’d choose not to buy when she actually had the opportunity. After one such decision not to buy a property, I said, “And THAT is the reason you are going to lose this game.” I then advised her against being too cautious and overly-picky. DD3 made it clear that she hadn’t asked for my commentary, so I kept smugly silent as the game progressed.

It was a slow, painful, and mortifying death I suffered. My smugness diminished into destitution as DD3’s worry blossomed into sheer joy. I had three full property sets while she had only one, but the old narrative played itself out. And you can bet I heard plenty ofher commentary when the inevitable end resulted.

The Power of Habit

I recently read the book The Power of Habit by Charles Duhigg, and it gives me some tools to use in tackling my poor Monopoly habits. (I’ve added the bold font.)

“Hundreds of habits influence our days . . . they impact what we eat for lunch, how we do business, and whether we exercise or have a beer after work. Each of them has a different cue and offers a unique reward. Some are simple, and some are complex . . . But every habit, no matter its complexity, is malleable . . . to modify a habit, you must decide to change it. You must consciously accept the hard work of identifying the cues and rewardsthat drive the habits’ routines, and find alternatives. You must know you have controland be self-conscious enough to use it . . . that control is real” (Duhigg, 270).

Step #1 – Acknowledge the habit: I have known for over a year now that I have the habit of over-extending myself when I play Monopoly, taking high risks that almost always end up with me going broke.

Clearly, the fact that I’ve acknowledged this habit has not meant that I’ve changed it.

Step #2 – Identify the cues and rewards that drive the habit’s routines: The main cue for me is landing on an unoccupied property. There is both fear and hope involved in a sense of urgency that I can’t pass up on this opportunity! Fear: If I don’t buy it, DD3 might, and then I’ll wish I had. Hope: If I buy this, I’ll get wealthy and win the game!  The reward is what Duhigg calls a “subtle neurochemical prize” – meaning my brain gets a bit of a happy hit every time I buy a property or a house. Wooooo-hooo!

Step #3 – Be self-conscious enough to use the control I have to find alternatives: The next time I play Monopoly, my challenge will be to respond differently to the cue of landing on an available property. I know that my impulse will be a fearful, hopeful I can’t pass up on this opportunity! But I know better, and I will exert control so that I don’t act upon that impulse. I will buy or not buy based upon how much money I have and whether or not I have already purchased one of the other properties in that set. I’ll forego the Wooooo-hooo! happy brain hit, and open myself up to the possibility of new rewards that come not with maxing out, but saving up.

Connection to Personal Finances?

Of course there are connections to personal finances here! Mine in particular. If you’ve been reading about my journey out of debt for any amount of time, you know that I struggle with my discretionary money. I overextend; I spend on impulse in both hope (“This will be fun/delicious/interesting!”); and fear (“I’ll regret it if I don’t buy it.”); and at the end of every month, my discretionary account is at zero. Or less.

Taking care of money

There are a lot of things I do wrong with money. I’ve been known to grab a few dollars from my emergency fund and occasionally overspend on my monthly budget. None of these things are horrible offenses but they also aren’t shining examples of my money prowess. However, my biggest money failure isn’t actually spending too much…it’s not spending enough.

I don’t spend money on myself. Honestly, it’s as simple as that. I love buying gifts, going on trips and even splurging on meals out with friends. But in the past few years, even those purchases have come with a side dish of guilt.

And the one thing you’ll never catch me buying is a treat for myself.

I wasn’t always like this though. Before my financial world crashed around me, I was much better at self-care. I would treat myself to a few massages a year, buy the occasional latte (just because) and never sweat a fun outing that I really wanted to do.

I’ve been working since I was 16 and I always had money in my savings account. I never had a problem with blowing my money, but I also didn’t have a problem with spending some of it either. I occupied the elusive ~middle ground~ and it was nice.

When I was unexpectedly cut off at the age of 20, everything changed. I had two choices: drop out of college halfway through or figure it out. I figured it out, but it came at the expense of my mental health.

There were so many different heartaches involved in my final two years of college, but the main one was fear. It was the first time in my life that there was no safety net. If I missed a rent payment or tuition check, then I had to figure it out…alone.

At the time, Alex was living across the world in London, my mom was living across the country in Oklahoma and my best friends were living in various cities across the state. With my support system spread out across the world, I felt as if I was physically alone too.

In order to make it through my first year supporting myself, I had to suppress my emotions. If I had felt all of the pain, loneliness and financial stress that accompanied that year, I would have imploded.

I slashed my budget to the absolute bare minimum and learned to live on peanut butter and pasta. My goal was survival and self-care was a luxury I couldn’t afford.

Today, my financial situation is drastically different. I’m debt free. I have a full-time job with benefits and a healthy emergency fund.

The day I became debt free.

But for some reason, I’m still stingy with myself. Every time I spend money on something fun, I start to sweat (literally) and feel waves of guilt wash over me. I check my accounts every day and even though there is more than enough money, I constantly worry that there isn’t.

It’s an exhausting way to live.

And recently, I’ve realized that it’s rippled out into other areas of my life as well.*

Without even realizing it, my charity donations have gotten smaller, and I’m much less likely to buy Alex a surprise gift or treat my sister to dinner after a long day of work. These things may seem small, but I think they are symptoms of the bigger issue: my attitude of generosity.

By being stingy with myself, I’ve become stingy with everyone else as well.

Driving to work last week, I listened to Farnoosh Torabi’s So Money podcast. The interview was with Dr. Daniel Crosby. As they began to discuss his childhood, it came out that Daniel’s parents were extremely debt averse and had paid off their mortgage by age 40.

I was immediately impressed.

However, that wasn’t the end of the story. The pay-off came at a cost. There were no family trips or delicious dinners. Instead, there was constant scrimping, saving and stress.

Daniel’s parents are now grandparents and their advice for their son is to NOT do what they did.

Daniel explains, “My dad has actually moderated his ideas about debt over time and has encouraged us to not do some of the things he did…Now they have a whole lot of money and they don’t have that time back…He preaches something different to the grandchildren because we did miss out on some things…Now my mom is in poor health and they have all the money they need, but they don’t have the opportunity.”

His story hit me hard because I could easily see myself as Daniel’s parents—scrimping, saving, planning for the future and constantly stressing about money.

But that isn’t what I want. I want to enjoy life, travel without freaking out about every penny and live with a generous heart…and a generous wallet.

I treated myself to frozen yogurt yesterday. There was no reason or occasion. I was alone at the mall and had just finished running some errands. After paying for my yogurt, I sat down in the sunshine with a view of the mountains and took the first bite. It tasted like self-care.