Monthly Archives: May 2011

Crossing the Blogging finishing line

Day 31! Have made it to the final day of the blogathon — today is the last post of the event. Of course you will still hear from me – but I go weekly from here on out, plus the odd ad hoc musing for sure.

THANKS ALL OF YOU for your comments — most of which were offline or via Facebook or text. Oh, we’re all so shy about money — and even if some of us are less so when we’re with friends, it’s very hard to do cash chat in an online room of strangers. What if your accountant is reading this? Or your mother?!

So since it’s too taboo to come right out and ask you about your income, debt, savings and shopping habits, I shall do this privately.  Please be a part of my research and take part in a totally anonymous quick survey. Link goes out later this week. In return for completing the answers you will receive the report on how you stack up compared with other blog readers.

A few words about the blogathon and blogging …

I was on my last day of a holiday in Mallorca when I came across an invite to join a month of daily blogging where the idea was to swap notes with other blogathoners along the way. Here’s what I learnt:

  • Blogging – especially enforced regular blogging, is a great way to explore a topic you’re writing about in more depth, to tease out the different issues, what you really want to say about them and what sort of thing readers want more/less of
  • If you’re new to blogging, a blogathon is the FASTEST way to force yourself to grasp the technology side of publishing it –
  • Daily blogging is a BIG committment (I don’t have all the technology mastered — apparently, there are ways you can write posts in advance and have them go live later)
  • And yet it’s not half as time consuming per blog post as I thought it would be. Yes, the odd post wrecked my head and took too long to write and I hated it anyway, most were snappy and pain-free (as I’m sure you might be able to tell sometimes)

On that note – before the Psychology of Money series, I was a relatively inexperienced blogger. I’d posted a few blogs here and there. About 6 or 7. A couple in 2008, a few more in 2009 and then I went underground and just wrote with paper and pen for 2010. Blogging invites you to publish immediately without an editor’s eye or friend’s feedback or indeed without the reflective tendencies to clear up your own sentences once you’ve slept on them.

That’s good. And bad.

My early blogs felt juvenile & embarrassing. And as I found my feet, I hated the idea that they’re out there . My poor little baby practice bloggies! But I decided it was good medicine to leave them posted and learn to live with it. At least for a while. So my prize to self for completing the blogging marathon is that today I delete those old posts. So if you didn’t read them, too bad!

Back shortly with more … on the Psychology of Money and other Panic Station considerations.

Thanks!

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Psychology of Money: 30

A few years ago I set aside a day to work through a few piles of personal finance avoidance. Instead I spent most of the day surfing the net to get to the bottom of how come I procrastinate in this area of my life and what the heck should I do about it?

Hmmmm… Yes.

 As most of us can appreciate at some level or another, procrastination is a very tricky business. Loads of self-help tries to talk you out of it with tips and tricks, but Procrastination Why You Do It and What to Do About NOW is the only serious book I’ve come across on the topic – based on over thirty years research (talk about procrastination!)

Rather than it being a reflection of a moral failing or a basic time management problem, it turns out procrastination is another one of those complex psychological issues — the roots of which gnarl through murky emotional, biological, interpersonal and cultural human tendencies. Thank goodness, yet another fault that isn’t my fault.

Because I am a little bit better than I used to be regarding the depth of my avoidance techniques when it comes to money management, I am not going to read this entire book before I sort out what I need to do next. I’m half-way through it anyway. And actually I worked out what I needed to do next about my finances some 29 blogs back… 

And yet over the course of this 31-day blogathon, depsite the fact that I publically announced in Psychology of Money: 1, 2 and 3 what I needed to do about my taxes, here we are at blog 30 and I haven’t (though somehow I can squeeze in a daily committment to blog?!)

 I’m not going to lie to you, sorting my taxes ain’t going to happen before the blogathon comes to a wrap tomorrow.

During that ½ day of my life that I lost several years ago surfing the net to get to the bottom of my procrastination, I still remember one piece of advice that I came across which struck a deep cord (clearly to no effect at the time.)

It went something like this …

Procrastinators have lied to themselves so many times – about what they’re going to do and when they’ll do it by, that they no longer have a shred of credibility with themselves.

Ok it wasn’t as harsh or as sweeping as that – but this was the gist. And the solution? Stop making any promises to yourself immediately. And when you’re ready, make a promise to yourself that you actually keep. And keep doing that – slowly making only the sorts of promises — one at a time — that you know for sure you will deliver on. The reasonable and realistic sort, based on your knowledge of yourself and your schedule and the sorts of interruptions you can bank on – what can you really get done/by when? In this way you slowly earn back your own self-trust.

As a serial over-goaler (in most areas of my life) and an avoider (in matters related to money and health), this struck me as a very sane way out.

And so I really need to sort out my taxes. My next action from 29 blogs ago was to look through a pile of papers to see if I could find an online code from 2001 and if not call the tax office and wait another 3 weeks for them to re-issue it. I know what I have on this week and there isn’t any obvious pocket of time for me to calmly flip through papers that are likely to lead to all sorts of new next actions and anxieties, but I can commit to doing this within a week. I have deadline for a project I care a lot more about which is next Sunday, therefore if I use that deadline as an excuse to avoid the paper pile for the next 6 days in a row, I’ll have no excuse this day next week.

So one way or another I’ll make the time and JUST DO IT.

Right?

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Psychology of Money: 29

For some readers the debt stats I quoted yesterday don’t mean much. Maybe your earnings, assets and debts involve numbers that make the national averages look harmless. Or maybe you’ve a very balanced budget, but today I’m still focused on debtors.

In the past when I’ve been “sorting my finances” sometimes I’ve sunk considerable time tracing backwards to better understand what numbers contributed to my current (im)balance. And others times I haven’t. Better to crack on with fixing the problem at hand.

One of the simplest habits I once found stupidly hard to stick with involved noting down what I spent my money on … as I spent it. Not just daily, but as it left my wallet.

In my twenties I had a friend that used to do this. We’d go out for a few drinks too many after work and at the end of the evening she’d take out a little notebook and a miniature pink pencil and in teeny writing insert the cost of her half of the bill. I thought she was mad.

Years later turns out this single habit is a lot more helpful than I ever would’ve guessed. It’s also another tenet of D.A. They believe that as soon as you start to do this, even if nothing material changes in your circumstances, some sort of higher power — however you may wish to define that, comes to help make those numbers balance.

This is not to suggest that D.A. operates on the same principles as The Secret (i.e. just ask the universe and you shall receive.) They don’t. But this simple act achieves more than just giving us a detailed up-to-the-minute cash consciousness. At least in my experience. And in the experience of a group of people who have invested serious time and energy to change their spending ways.

So, is knowing how we got into debt important? No, not really says D.A. Knowing the how-come’s doesn’t help with now-what?!

But in case you’re curious, here are some of the big factors that contribute to compulsive debting (which covers overspending and under-earning):

  1. Problems accepting reality – escaping into shopping and other activities that involve spending in an effort to avoid our problems including, ironically, our financial problems.

    I once had a shopaholic friend. Her debts used to cause her such distress that she would medicate with some retail therapy. With other people it might’ve been alcohol. And even though I could never relate to her shopping or hoarding, I could see that for her it seemed the only instantly effective balm. Needless to say, the effect wore off fast and it made her financial reality a total nightmare. It’s one thing getting into debt to get yourself through college, it’s another to double it by competing with Imelda Marcos’ shoe collection.

  2. Emotional insecurity – Do you still feel like a kid and find it hard to accept that you have grown up responsibilities? When it comes to buying white appliances I often feel this way. I think sheesh, I have to fork out this much to buy something required for chores? I feel the same way about going to dentist. It’s like I’m waiting for my mother to drag me there. Even though we stopped living on the same continent about twenty years ago.

    Plenty of people have areas in their life (or even all areas of their life!) where they can’t quite grasp that no one is going to come to the rescue. Serial debtors often operate on the barely conscious assumption that at some point someone will help them sort of the hole that they’re digging.

  3. But the biggest factor of all? STATUS. No matter how independent-minded you think you are or even actually behave, one of the things we still have in common with the animal kingdom is that whenever we interact with another person we are busy assessing or confirming our status and theirs. And what’s the most obvious way to overstate our status? to pretend to be something we’re not? By keeping a lifestyle and having materials on show that we cannot afford.

    Even for those of us who really enjoy a low to middling status compared with whoever we deem to be our peers, just keeping your nose above water often means going well beyond your means (since in general our entire society is totally debt ridden and materialistic.)

    Now if you think this doesn’t apply to you because thankfully you’ve made it to the big bucks or because you voluntarily downsized … think again. Big bucks people are often stuck in a spiralling misery of lifestyle costs that are not easy to opt out of (e.g. real estate, children’s education.)

    And smug down-sizers? Ask yourself how you manage your status today? Do you compare yourself to a different group of people than those you once called peers? Have you moved to another country or areas where you are relatively better off? Do you start competing with others over how many hours you don’t have to work, how little you have to spend? Have you become an inverse snob?

Far be it from me to say we’re all so predictable and we’re so similar. Or to pretend to know better than you do. But the truth is where once I was only fascinated by what makes each of us different, the more I learn, the more I believe that what we have in common in much more interesting.

And ANYWAY if you can relate to the debt problem, then it doesn’t really matter why you’re in a mess. Just that you are.

Happy Bank Holiday to those of us in countries celebrating a day off tomorrow. Hhmmm… I wonder how much that’s going to cost the US and UK economies?

 

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Psychology of Money: 28

In case you haven’t had your daily fill of scary research findings, consider these:

  • In the UK, individuals currently owe nearly as much as the entire country produced during the whole of 2010
  • Average household debt in the UK is ~ £8,144 (excluding mortgages).
  • This figure increases to £15,661 if the average is based on the number of households who actually have some form of unsecured loan.
  • Average household debt in the UK is ~ £55,870 (including mortgages).
  • Citizen Advice Bureaux dealt with 8,004 new debt problems every working day in England and Wales

For more go to Debt Statistics – compiled May 2011

In case these numbers don’t mean much to you – the national average income for people who have been working between 10-20 years is £35,000.

Now, not all debt is bad, just like not all drinkers are alcoholics. Try getting a credit card or buying a house if you’ve never incurred debt in your life (you have no credit rating and won’t get the loan.)  But not many of us have this problem, that’s the obvious moral of the past 2 years.

The good news is that according to Barclays Young Ultra Forward-Thinking Savers (YUFTIES) now account for between 32% of 20-29 year olds who save, on average, almost 20% of the monthly earnings. Younger people are mending our bad habits.

If this doesn’t include you and the idea of getting out of debt is the last thing you want to think about, you might want to consider getting yourself a SPENDING PLAN as recommended by Debtor’s Anonymous.

Now a financial advisor will tell you to make a budget, get out of debt, then start to save and then hurry up and make losts of investments before you find that you’ll never be able to retire. This is why people like me don’t consults financial advisors. They’re just impossible to reason with.

D.A. suggests a different approach where you put together a plan that starts to pay off your creditors while also proving to yourself that you can create cash reserves (i.e. savings) right now. And for most of us who have never pulled off the budget/clear debt/save method and stuck with it year in and year out, D.A.’s spending plan is the saner way to go.

As the title suggests, the plan is designed to help you manage your spending rather than detail out a budget that’s only going to make you bite all your fingernails off. There are worse things than being in debt and one of them is refusing to do anything about it. Trust me, the stats I found on debt-related death and disease were even more depressing.

Yours, cheerfully. Back tomorrow with brighter tales

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Psychology of Money: 27

I had an unusually specific and concrete thought one morning last week. Unusual for me anyway seeing as it was morning which is when I tend to be at my most abstract.

I worked out that I’ve 20 poker chips of time to portion out each week at work. By my definition, a poker chip of time is “a proper hour” that takes place at a time when I am both awake and at my desk (not on blackberry or in transit where I can still work, but not properly).

I calculated the number of chips I had by listing all the predictable tasks I have each week that no one else will do and subtracting the time it typically takes to get those things done from my normal working week. And now I know I can say yes to 20 additional 1-hour commitments or forgo sleep – which anyone who knows me understands, is NEVER AN OPTION.

Since my job involves responding to an unpredictable # of urgent requests each day, this chip concept is a very easy way to help me make smarter “in the moment” decisions about what to say yes to and what it would be saner to hand off to someone else.

I might even apply the poker chip concept to other life areas where I have goals I am trying to reach – with writing projects or exercise challenges. But I am aware that if I am going to get this goofy it’s probably best not to own up to it.

The important thing to remember is not all chips are equal.

For example, one hour of my pre-noon time spent writing is just not the same quality as one hour of me after 5pm. The later it is in the day, the more likely I am somewhere being productive. Mornings and me are all a bit floaty and abstract. Light admin is all I can handle. Like making coffee.

Tomorrow back to chat about hard currency cash. Till then, Happy Friday.

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Psychology of Money: 26

You know when you’re moving about 3x’s faster than your computer – when you’ve opened three more documents you need to look at while your system still chokes on the first and then spazzes out when you get impatient and flick back to another program to attempt to multi-task even if your computer can’t.

It’s been one of those days when the chances that I might act violently towards my technology rose substantially.

The reason for this, of course, is that my laptop can sense that I’m stressed and busy and is trying to tel me to chill. But time is money!

Or that’s what Tim Ferriss would have us believe. My brain doesn’t work that way. I just hate being late and I hate not getting things done when I said I would.

And while I appreciate I’d be having a more manageable day if I already learned how to automate and eliminate as he recommends, time isn’t exactly money, is it? I could borrow a fiver right now, I can’t borrow the 3 extra hours I need before 7pm when there are only 67 minutes left till then.

But if we all started to think about our time as money would we find it easier or more difficult to manage our comittments? I suspect I for one, might make some different choices.

This blog has been brought to you by a woman hurrying up the walk/leap side of the escalator while typing her blog onto her berry before she has to leave the tube station into the lashing rain of a proper thunder storm while not slipping (because none of this is worth death or a head wound, is it?) and taking a phonecall before she is late for her next meeting.  

But there was just no way on earth I was going to fail in my daily blogathon mission so very close to the end of it …

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Psychology of Money: 25

Two blogs back I shared the mindset of a friend of mine – a mindset very far from my own, but one that liberated them from living just to work – which is the rat race many people I know are caught up within.  This friend is obviously good at using and managing their money – and they might even be good at acquiring money (back to Gallo’s model again). But while I’m in the mood for a radical re-think of my money skills and deep-seated habits,  unlike my friend,  I have loads of fear about being strapped for cash and not much fear about doing a job I don’t always like.

Enter Tim Ferriss and his promise that I can work a 4-hour week. If you don’t have time to read his 381 page book, the video underneath offers a synopsis in 6 minutes flat. Even though I’m only partially through the book, I’d urge you to pick up a copy. Ferriss just isn’t that funny (or necessarily convincing) on video – whereas his book is often both LOL and compelling. At the outset of it he compares typical financial aspirations compared with what he calls the “new rich” mentality.

Typical: To retire early or young

New Rich: To distribute “recovery periods” and adventures (“mini-retirements”)  throughout life on a regular basis. Inactivity is not the goal

Typical: To buy all the things you want to have

New rich: To do all the things you want to do & be all the things you want to  be. “If this includes some tools and gadgets, so be it, but they are either means to and end or bonuses, not the focus”

How on earth do we get to be New Rich? We need to “unplug & reset” ourselves and walk away from the madness of the mob – we need to think a bit laterally and independently. Ferris shares his ideas on how to do that inside his book (or go to itunes and download one of his free podcasts.)

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