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Money Forum

Become Debt Free

According to NerdWallet, U.S. credit card debt was $129 billion (2015), with the average household carrying $15,000 + (not including cars, mortgage, student loans). Debt burden weighs heavily on our lives. I’d like to talk about the debt effect, and invite you to set an intention for becoming debt free in 2017.

Emotional impact
Societally, we associate money and material possessions with success. We feel embarrassment and shame if we can’t make a good show. So we portray ourselves as living a lifestyle with all the stuff that shows we’re worthy, whether we can afford it or not. We build up debt to maintain an image that is not really us. That disconnects us from how we feel inside.

Anger and frustration
Debt causes us to live paycheck to paycheck, and it’s pervasive in all income levels. People get angry and frustrated, especially toward agencies and institutions hounding them for payment. With so much of our income going toward credit card debt, essentials are hard to afford, like medical care.

Denial
Burying our heads in the sand is not a solution, yet many of us won’t even admit to ourselves how much debt we carry. Debt often results from compulsive patterns of buying stuff (even online) to soothe our emotional demons. We avoid getting to the heart of our issues. Then guilt raises its head from the sands of all the accumulated stuff.

Depression and illness
Struggling to pay back debt causes much physical and emotional suffering. We lie awake at night worrying. We erupt emotionally. We feel sick in our gut. We self-medicate. We are not fully awake in our lives, or on the job. We look at the world darkly.

Resentments
Avoiding the look inward, we project the cause of our problems onto those closest to us. We blame loved ones and business partners. We blame employers, and ask them for raises without considering that a pay increase should be connected to the value we bring and not our money problems.

Regrets
“If only I hadn’t . . . I wouldn’t have bought . . . ” Debt can manifest in feeling sorry for oneself and even self-loathing.

Fear
How will we pay for our lives? What if we lose our jobs? What if there is an emergency? How will we attract a spouse or partner when debt makes us such a poor catch? Young adults worry where debt will bring them to live: back with their parents, or crammed into a small apartment with tons of roommates or an unsafe warehouse?

The freedom of getting out of debt:
There is a huge relief when we move beyond debt. It is rapture beyond words. Debt free and living skillfully within our means brings a renewed self-confidence. We come into alignment with our true values, and find a joy in living simply and honestly. We know we can do anything.

Getting to financial freedom and living skillfully within your means can be hard work, and often requires professional assistance. Contact me to schedule an appointment for creating a cash flow plan that works for your life and goals.

Prosperity in the “New Economy?”

“The new economy” has been bantered about since the year 2000, when money was easy to come by—though it was mostly money obtained through credit and equity loans, not real cash. We felt prosperous. It seemed money could be made everywhere in the world, and it would never end.

Then the housing market crashed, notes were called in on bad mortgage loans, and it became clear our “money” was smoke and mirrors. Student loans became impossible to get and rates skyrocketed. Those of us in financial services started advising people to have a year of cash in savings, not just the 3 months of emergency money we used to think prudent.

What is economic reality today? Clearly, real estate is starting to come back in most U.S. markets, tech industries are on the upsurge and there is some belief we’re recovering. But it is slow going. And that ounce of recovery should not open the door to the spending frenzy that caused the collapse. If we’ve learned anything in the past decade, it’s that we should only spend money we actually own—not rely on credit. We should also save the money we own.

Credit cards are not a bad thing, as long as they’re used sensibly by paying off balances each month. But too many people harm themselves by misusing credit cards. Let’s get clear, “credit” is something you earn. “Debt” is what you get when you spend what you have not earned. (We’d be more hesitant to swipe a “debt card.”)

Let’s get clear about something else, buying something at an “act now” discount is not saving money—it is spending money. Saving money is putting cash into a savings account or investment. Those too good to pass up deals are advertising ploys to get you to spend money. They are also based on the tactic of fear—buy it now or the deal will go away. The question is always: Do you really need it? Does it justify spending money or going into debt? What legitimate needs will not be met if you spend your cash on it?

This economy requires financial responsibility in our lives. That means having clarity about what we earn and what we need to pay for our living expenses. It means making wise purchasing decisions to make sure our needs are met, and being mindful when purchasing beyond our needs so we don’t rack up debt. Equally, it means saving money we earn—not just to give us some security in these uncertain times—but to plan for the occasional big expense (like a new car, home, wedding) as well as our future.

Financial responsibility is not something new. It was the American prosperity consciousness before the 1950s and the introduction of credit cards. Before we were spoon-fed the notion we need to buy more to have satisfying lives.

– Kathryn Amenta

Working Globally from
San Francisco

PH: 415.333.6972

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1693 Polk St., Suite 210
San Francisco, CA 94109

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