Category: Money

Estate/Financial Planning/Legal Separation/Divorce/Money

Persuading Yourself

Full disclosure:  I like the way that Dan Pink thinks and I like the way he writes.  “Free Agent Nation” captured my imagination a decade ago, “The Adventures of Johnny Bunko” cheered me up during a tough career patch, and now “To Sell is Human” has given me some excellent food for thought in terms of persuading others…and myself.

Pink acknowledges that “we human beings are notoriously bad at wrapping our minds around far-off events.  Our biases point us toward the present.”  This is a big hindrance in decision-making, whether it’s about deciding to go ahead with estate planning, to finally get in control of finances, or make other big life shifts.  In a series of experiments, Hal Hershfield, a social psychologist at New York University, worked with colleagues to study the decisions that research participants made regarding retirement savings.

After these experiments, Hershfield concluded that participants who saw aged images of themselves–not just any “old” person, but themselves–always saved more.  The insight?  In Pink’s words, “we think of ourselves today and ourselves in the future as different people.”  It’s amazing that this seems to happen so consistently, and we don’t even notice it!

Since reading this, I’ve really enjoyed framing decision in terms of whether I’d be satisfied with the outcome if it were to happen right now.  Would my current “me”, with all my reasonable needs and irrational desires, like the reality the decision would create?  If the answer is “no”, then it’s time to make a different decision.  Can you think of how this might help you persuade yourself?

 

Money

Even Better Money Management Software!

Today is a really exciting day because the new, improved MoneyMinder software is now available for purchase online!  It’s not an exaggeration to say that the MoneyMinder is the financial software that I wish I had a decade ago.  Now, it’s even better and easier to get!

Jump over here to find out about the benefits.  

For cynics:  Although this is the tool that I use with clients, there’s no financial gain to me if folks sign up.

Divorce/Money

The “How” of Financial Happiness

Can it be that more than two months have passed since my last post?  It never ceases to amaze me how November and December seem to fly by!  My latest theory pins blame on the 4:30pm Seattle winter sunsets…but enough kvetching about daylight in this northern latitude! Onward!  

My purpose here is to blog about Sonja Lyubomirsky’s “The How of Happiness:  A Scientific Approach to Getting the Life You Want”.  True, it’s not a new book.  That said, it nevertheless offers some good food for thought.  (Surf over here to check out the book’s website.)

Lyubomirsky’s conceptual starting point is that we desire a set of circumstances–a life packed with beauty, wealth and/or fun times–because we think that’ll make us happy.  In fact, based on the research she cites, only 10% of our happiness comes from circumstances.  On the other hand, 40% of our happiness comes from intentional activity on our part.  Put another way, our behavior determines four times as much of our happiness as our circumstances do!

I’m going to gloss over the heart of the book and instead encourage you to just read it.  You yourself have to figure out what combination of Lyuomirsky’s dozen happiness activities are likely to make you happy.  The punchline for this post is the importance of one of the five “hows” of happiness:  the “how” of motivation, effort and commitment.  Lyubomirsky stresses the following as being important to happiness:

  1. You must resolve to undertake a program to become happier.
  2. You must learn what you need to do.
  3. You must put weekly or even daily effort into it.
  4. You must commit to the goal for a long period of time, possibly for the rest of your life.

Of course, while Lyubomirsky lists these steps in service of a happiness program, they apply to any effort for change.  That’s why I thought of my financial coaching clients when I read this.  These steps are critical to moving past financial pain points and moving on to financial well-being.  As I write this now, I’m wondering about how to incorporate these steps into my coaching in an explicit-but-not-obnoxious way.  It’s worth following these steps, don’t you think, even if money doesn’t buy happiness?

 

Money

Top 10 Personal Finance Books

Looking for some reading, now that the days are getting shorter and the weather outside less pleasant?  Here is Time.com’s list of top 10 personal finance books.  The list itself dates back to June 2011 but don’t let that be a deterrent!  Happy reading 🙂

Money

Quick Fix Won’t Help Finances

The November 2012 print issue of Oprah magazine includes a nugget of very important financial advice from Suze Orman.  While I’m often critical of the financial advice you read in most magazines because it’s too simplified, I actually found something worth sharing!

The set-up:  A reader wrote in, asking whether Suze “approved” of the reader’s plan to withdraw retirement funds to pay credit card debt.  The reader is a retired 59-year-old police offer with a fixed annuity of $100,000 and $25,000 in credit card debt.

The advice:  Suze makes some good, very practical points that the withdrawal will be taxed and may include fees, both financially draining consequences.  Yes, that’s important.  But it’s not what had me think “I’ve got to blog on this”.  Instead, the part of Suze’s reply that sang to me was when she questioned what led to $25,000 in credit card debt.  These were Suze’s wise and cautionary words:

If you don’t have a strong handle on your spending and expenses–and please be honest here–then the last thing you want to do is use your annuity to dig yourself out of debt.  That kind of quick fix, in the absence of some serious behavioral shifts, will only lead you right back into the habit of acquiring credit card debt.

I’m not religious, but let me say:  AMEN!  What this reader suggested by using some of her annuity is a lot like the quick fix of a few years ago, that “fix” being paying off credit card debt with a home equity line of credit.  Folks would do that, not fix their habits, and eventually find that they had credit card debt again.  It’s the principle of the need for some serious behavioral shifts that makes working with a financial counselor so effective when the other “quick fix” options don’t work.  Just following the money-saving quick tips out in the Ether is a bit like learning how to drive based just on street signs.  Both approaches eliminate critical context for informed decision-making and both approaches are pretty limited on feedback until things get awfully messy.

Money

How Debt Can Lead to More Debt

Psychology Today has a brief article in its September/October 2012 print edition suggesting that financial anxiety can actually cause folks to take longer to respond to words associated with other financial concepts (examples include “debt”, “overdraft”, and “bonus”).

The piece says:

An inclination to avoid money matters is common. But it’s an especially dangerous strategy for people already in debt.

In a set of studies in the Journal of Neuroscience, Psychology, and Economics, those with more financial anxiety took longer to react to words like “debt,” “overdraft,” and even “bonus.”

Such reflexive avoidance mirrors some of the key symptoms of a phobia. When people start ignoring unpleasant bank statements, their debt and anxiety feed on each other, creating a negative loop.

Though no one is saying that “financial phobia” should be a diagnosis, the study’s authors suggest that therapists could apply proven phobia treatments like cognitive behavioral therapy to correct the avoidant thought patterns that afflict financially anxious patients.”  – Matt Huston

While I’ve not tracked down the studies themselves yet (they’re in Vol 5(2), May 2012 of the Journal), I am fascinated by the implications.  The implication is that when we’re in debt, we are particularly in need of the skillful assistance of someone else to help us face our situation.  What I imagine stymies so many people is that it’s still not “nice” to talk about money and there are money tips so many places that we feel like we should be able to fix it ourselves.  Take heed!

Estate/Financial Planning/Money

Women and Money

This article from the September 2012 issue of Real Simple is a piece about which I have mixed feelings.

On the one hand, there are some anecdotes to which folks may be able to relate and the author raises some important long-term considerations. This is good stuff.

On the other hand, I see an oversimplification of what it means to take charge financially.  True, learning about investing and retirement savings are critical, and those things involve money.  However, I think that there’s an important middle layer of financial awareness and planning that the author glosses over.

The author talks about bargain-shopping, pinching pennies and hunting down sales.  This is pretty day-to-day stuff, and it can be important for living within your means.  But then, the focus of the article shifts to long-term planning.  Ack!  It’s a little like getting into an elevator on the ground floor of a building and finding out that it lets you off in space.

What my financial counseling experience highlights is just how powerful it is to know where you stand financially from month-to-month and year-to-year and to plan accordingly.  This is the middle layer of financial awareness that gives you the peace of mind to take those pennies (or dollars) you saved and direct them accordingly.  This layer is vitally important and one that needs more press!

So, the jury has reached verdict on the piece:  As is often the case with magazine articles, there’s a gap between what the article promises and what it delivers.  Read wisely.

Marriage/Money

Learn Partner’s Money Style Before Marriage

For fun, I thought I’d share this article from the Money section of MSN Canada.  (Canadian print media may become as addictive to me as Canadian TV already is!)  Even though the article was originally published more than two years ago, the information is just as helpful as if it had gone up the this morning.

As an attorney and financial coach, I have absolutely seen what happens when couples are not on the same page about how they will earn, spend and save money.  The first step requires you to get really clear on your income and expenses–this can be tricky because it’s not a skill or process that we’re taught.  (There is help out there, though, whether in the form of a financial planner or financial counselor!)

The initial steps of starting a conversation and facing reality may be the hardest to take, but they may also be the most helpful in sustaining a relationship.  It’s not sexy, but my personal hope is that anyone who is considering marriage take time to educate themselves about how each person’s assets and debts are treated during marriage, upon divorce and in the event of death.  Unfortunately, most clients I see have learned these principles when it’s too late to change things.  I haven’t seen any studies, but I bet learning about property law is a bit like sex ed:  It helps folks make safe choices rather than engage in risky activity!

Marriage/Money

Money Mistakes to Avoid

This post on US News’s “Money” site is actually just about a year old, but the advice is absolutely apt.

I encourage you to visit the original article because there’s some good food for thought with the description of each mistake.  Here they are, in brief:

  1. Not talking about finances.
  2. Combing accounts too early.
  3. Sharing credit cards, real estate and other types of debt.
  4. Getting surprised by the marriage penalty.
  5. Ignoring the risk of a break-up.
  6. Putting one person in charge of money.

I second these sentiments, and I’m thinking I might check out the book from which these tips are excerpted.

Legal Separation/Divorce/Money

Post-Divorce Taxes

While the filing deadline for Federal income taxes passed a few days ago, this piece on Time.com offers tips on some issues that often come up for divorced folks.  One highlight:  In certain instances, married-but-divorcing folks can file as “head of household”.  Happy reading…and be sure to consult a tax professional for tax advice.