Why do we make our financial life so difficult when it doesn’t have to be? One reason is that we want to feel better right now and our consumer culture loves to prime the “I work so hard, I deserve something” pump. Feeling stressed, unhappy, dissatisfied? Buy something – that’ll make everything better - temporarily... Except that after the initial glow wears off – usually by the time you get home – remorse or guilt set in, along with the now monthly payment that goes on and on. Yow.Read More
Is the middle class of old going, going, gone? Yes and the sooner we take our heads out of the sand of denial, the sooner we can strategize and create positive job solutions.
Here are economic facts of the last 40 years:
In previous recessions (2001, 1990-1991, 1981-1982, 1973-1975) mid pay jobs rebounded each time, but the net effect was still lost midpay jobs with each recovery.
In the recovery of 2001 there was a 5% net loss of midpay jobs, in 1990-91 a 20% netloss of midpay jobs, in 1981 32% net loss. In other words with each recession the recovery of midpay jobs has declined. The net effect is that the middle class has lost ground with each recession and recovery period. “Half of the 7.5 million jobs lost during the recession were in industries that pay middle-class wages, ranging form $38,000 to $68,000. But only 2% of the 3.5 million jobs gained since the recession ended July 2009 are in midpay industries.* Mid-wage jobs were 60% of recession losses but only 22% of recovery growth.
What about the poor? How do two working adults make enough money for rent, food and basic necessities on a $7.25 an hour minimum wage? They don’t. In California, the miniminum wage is $8.50 an hour. If the minimum wage was pegged to inflation over the past 40 years, the federal standard would be $10.58 an hour.* Still not much to build a better life on.
Who or what is to blame? It's more complex than this answer, but technology is the major culprit, though of course the housing market and banking excesses share the blame. Though we love our technology, it is the main problem in terms of recapturing lost mid wage jobs because robots, software and newer and better apps do jobs faster, cheaper and more productively than humans can. Companies understandably go for increased productivity and earnings and cheap, effecient labor.
What's the solution? First of all, letting go of the dream that things will go back to the way they were. Forget it. Let's move on. Then, we need our best, most creative economists, along with folks from the middle class and poor to brain storm short and long term solutions to job creation because, believe me, we are all in this economic soup together. If the middle class and poor continue to lose ground that affects all of our standard of living. We can create job solutions. We must start now and we can't leave that to Washington alone. (*“The Great Reset, Recession, technology kill middle-class jobs,” Modesto Bee January 27, 2013, ** Michelle Singletary, Mod Bee 1-27-2013)
My Money Attitude for much of my adult life was avoidance. Except for paying the bills and talking to our financial advisor once a year, I didn’t think about money much. I worked as an addiction specialist for over 20 years and was more focused on helping than how much money was coming in. Then I started a coaching practice, my husband will be retiring, and last year I became Certified as a Money Coach. Now, I’m VERY interested to know more about money and how I and others, think about, manage and especially mismanage their money.
Here's a Quick Money Assessment:
Is your current attitude about your money more based on fear or peaceful?
Fear ___ Peaceful ___
Do you feel in control of your money? Y N
Or out of control, overwhelmed? Y N
Do you actively manage your money on a daily or frequent basis ? Y N
Do you avoid checking your balance? Y N
If you’re 35 or older, are you actively saving towards retirement? Y N
What I hear when I talk with clients is that our attitudes about money are all over the board – from total avoidance to obsessive worry. Neither effective strategies for feeling good about our money or helping it grow.
I also notice that people are rather clueless about how to manage the money available. I was and who can blame us? What money management practices did your parents teach you? There are folks may look really good from the outside – nice house, car, pretty clothes, upscale lifestyle. But because I’m a Money Coach I see what goes on behind their financial doors – not so functional. No judgment or blame – they’re doing what they believe they need to do to feel good about themselves.
Steve Repak’s new book: “Dollars & Uncommon Sense: Basic Training for Your Money,” suggests that retraining the mind is essential to changing your money habits and that it’s never too late. First he says you have to commit to wanting things to change, to be different. So true, as the addiction author Ernie Larsen said, “If nothing changes, nothing changes.” Repak suggests starting with small changes – instead of going out to lunch every day (can save 150.00 a month easy there) pack a lunch. Commit to reducing debt one card at a time. (Nothing new there.) And, this is my encouragement – stay focused on your financial goals, which means you need to have some to begin with. A good first step is to know where you’re at – income, expenses, bills, needs and wants.
"It was the best of times, it was the worst of times...," wrote Charles Dickens in the 1800s. The same could be said now. Apparently for the top 1% of America it's the best of times. One of my questions since the crash of 2008 has been "Where has all the money gone?" According to the Congressional Budget Office the top 1% of U.S. households almost tripled their after-tax income from 1979 to 2007. For us middle class folks, after-tax income grew 40% and the lower end of the economic scale increased also, but only by 18%.(Modesto Bee 10-27-11 Rich getting richer more quickly)
But let's wait a minute. Hasn't wealth in America (& the world) always been unequally distributed? Yes and let's start by looking at what the definition of 1% really consists of. First, according to Joyce Apleby, emeritus professor of history at UCLA, there's income and there's wealth. To be a one-percenter you have to earn more than $700,000 a year (income) and have assets (wealth) of more than $9 million.
Ok, now we understand the basics of 1% economics. What's the economic truth for the rest of us? Have we middle class Americans been operating from an illusion that we could become rich? Yes and no. "From 1776 to the present, the bottom 60% of the U.S. population has never had more than 11% of the country's wealth." Hmm...Of course if you've done the math this 60% doesn't account for 39% of us.
Back to the question of, "Where did all the money go?" Well, well we know the banks got a lot of money. The investment bankers and hedge fund guys that is. But, I don't really think there's a simple answer to this question. We have a dream in America that hard work, luck and opportunity opens the door to fortune. That dream is a good one because it creates HOPE and in every generation the dream becomes true for a few. This "worst of times" economic recession is a wake-up call to look at the economic inequalities that have always been present, for the 99% to to keep the hope, the hard work and to hold the 1% accountable to a financially more equitable system for all.
When does the "gotta have it- want it now" lizard brain run over the rational, logical neocortex when it comes to how much money is enough? When the drug of "more is better" is fed over and over again with repetition. Dr. Peter C. Whybrow, author of "When More Is Not Enough," and chairman of the Department of Psychiatry and Behavioral Sciences at University of California, Los Angeles (UCLA), connects the dots between the world economic meltdown and the ancient lizard brain that hoards for a rainy day. He states that even when there is an abundance of food and goods, the reptilian brain still acts as though there is deprivation. Michael Lewis, author of Boomerang, in a recent Vanity Fair article points to an interesting piece of trivia: overlay a color-coded map that highlights American personal credit over the Center for Disease Control’s map for obesity and you get a similar pattern. No big surprise there - overindulgence in one area of our life slips over into other areas.*(from http://www.mb.com.ph/articles/339566/lizard-brains-and-financial-crises).
As an addiction specialist what I know from 20+ years in the addiction field, hundreds of clients and research for Intentional JOY: How to Turn Stress, Fear & Addiction into Freedom, is that whatever we repetively do trains the brain, either positively or negatively. As Dr. Whybrow says, "If you follow the path of self-indulgence often enough, eventually you will lose the ability to self-regulate, (which is) a higher brain function."
In simple language that means that in times of plenty the reptilian or lizard brain doesn't know how to adjust it's hoarding instincts. Addiction anyone? I look at addiction as a continuum. At one end of the continuum are those of us in American culture that have no addictions and the other end are those whose lives are completely unmanageable with their addictions. These are the folks who have major financial, relational or health problems because of their addictions. Most of us lie somewhere in between and we still have choice.
I think the world financial crisis has the potential to awaken us to not only the mistakes we've made with money but to change the addictive beliefs that MORE will make us happy. Research shows that's an illusion and that once basic needs are met, more does not increase lasting happiness. Instead, to get the reactive lizard brain under control we need to face our fears, figure out how much is enough, and practice the discipline of daily right action.
Could they do any worse? Most of us are rather clueless about what really happened to bring about the crash of 2008, but one thing is clear, while we are all in this mess together, we didn’t all put us in this jeopardy. Greed is the real problem. Yes, individual Americans have a part in creating this calamity. They borrowed more money than they should have. Credit was so easy to get and banks were so happy to push it. But, the real story is more disheartening than just the lack of individual responsibility.
This current economic roller coaster started with the deregulation of the banks in 1999 under President Clinton. This did two things. It unleashed the easy credit frenzy and banks could once again offer stocks for sale. In 1999 the Financial Services Modernization Act was passed which deregulated the old Glass-Steagall Act of 1933. That law was passed after the crash of 1929 to protect the public from banks. With deregulation, banks were freed to unleash their greediness once again (hmm…. what we don’t learn from our past we are doomed to repeat). Deregulating the banks was like putting the wolf in charge of the chicken coop and expecting them to behave themselves.
The other greed factor and a “hidden cause of the current global financial crisis is that the people who saw it coming had more to gain from it by taking short positions (or by buying credit default insurance- in other words betting against America) than they did by trying to publicize the problem.” (Michael Lewis: Boomerang, 2011)
Here’s my question: If more women were in decision-making roles in Congress, banking institutions and large corporations, would this folly have happened? One Icelandic woman, Halla Tomasdottir, noticed the financial crisis that was building in her country and quit her high-level position as the CEO for Kaupthing Bank in 2006. She didn’t like the way things were going. She started her own financial services business totally run by women. Her company is one of the few profitable financial businesses left in Iceland today. And, Bloomberg reported that while women make up only 3 % of hedge fund managers, their portfolios profited 55% more than men’s from 2000-2009. (Can Feminine Values Fix Finance? http://www.cnbc.com/id/44860469)
The definition of rape is usually associated with a woman being physically forced to have sex. However, it is also "an act of plunder, violent seizure or abuse; as in the rape of the countryside," or in this case the rape of our world money system. Though hundreds around the world invested in the credit default swap market, 15 Hedge Fund managers went ALL IN and placed enormous bets that American finance would go up in flames. In other words they bet that the easy finance house of cards bank created would collapse and they could cash in. That's exactly what happened. Even though these financiers were betting against us, a few tried to warn Bear Stearns and later the goverrnements about what was coming. But, the ostrich phenomenon kept everyone from listening, or most importantly, taking action, until it was too late.
The very sad and still scary part of this story is that the fall is far from over. The world economy has never had the kind of debt it now has. For example: in 2002 world debt went from $84 trillion to $195 trillion. To give you some understanding of the numbers: Ireland's debts were more than 25X it's tax revenues. Spain and France 10X annual tax revenues. No where to go financially but down. Iceland, (I'll blog separately about the lessons from that country) ended up with debts amounting to 850% of their GDP. The U.S. 350%. Yow!!
If you haven't understood what exactly happened to put the money world in the predicament we're in, then read Michael Lewis' "Boomerang." He concisely explains the series of events that led us to the precipice we're on. Events that were predicted back in 2004. Here's a quick summary: In 2004 Wall Street created the credit default swap which enabled investors to bet against the price of any given bond - to "short" it. This is like default insurance on another person's investment.
The Solution to our world financial crisis? No one really knows. But it's interesting that the "Occupy Wall Street" Marches have sprung up and people are waking up to the fact that SOMETHING different needs to occur with our financial system and the way corporations plunder while everyday folks suffer the effects. What do you think?
If you've been reading this blog you know I've been expanding my study of the subject of "money" this year. We need to know how to manage our money beyond the nuts and bolts of budgets and retirement planning. Do you know why you have trouble getting past certain life long money patterns? To understand what's drives the bus of your challenging money behavior here's a story from "The Secret Language of Money" by David Kreuger MD. Two anthropologists went to two separate yet identical ape colonies to live and observe for a year. After the anthropologists finished their year they compared notes. One had been accepted and assimilated into the colony, the other never was. They couldn't understand why - until one anthropologist admitted he had kept a gun with him. He never used it or showed it, but at some level, he knew it was there. The gun kept him from fully committing - it was his out.
Now, how does the anthropologists hidden gun relate to the story we make up and play out with money. Dr. Kreuger says our money stories are "the subconscious tale you tell yourself about who you are, what money means to you and what it says about you. Our money story isn't only about money. It's about everything." (Kreuger)
What does your money story say about you? Ask yourselves these questions: 1) What's the greatest annual income I can reasonably expect to earn? $_____ 2) What is the greatest annual income my money story will allow me to have? $_____ Until you become aware of the story that lives underneath the way you operate with money, nothing will really change. Oh, you can create a budget, or tinker with affirmations, but I know from experience that until there's a deep inner shift created with awareness and new behaviors and practiced over time, your money story can't really change.
"You can never be too rich or too thin." Babe Paley, 1950s socialite
Did you know that wealth and weight issues are often tangled together for women?
Women will go to extreme measures to look good and spend thousands of dollars over a lifetime on diet products, clothes and shoes and justify the expense for reasons that vary from: "I have to look good for work," to "I'm working so hard I deserve this." By the way, that same justification works for food as well as shopping. Some women shop (or eat or restrict eating) to fill time because they're bored, or for the adrenalin high that comes with shopping anticipation.
These are not bad or wrong behaviors or feelings but they only work temporarily to make you feel better and they can dilute your power and productivity.
Weight and money issues are self-esteem issues. Insecurity and the advertising industry drive the multi billion dollar dieting industry, pressure women to have more clothes than they can wear, purchase designer bags and shoes, and develop wasteful spending habits. I'm not saying it's not fun to spend money, but to take charge of our money women need to be very MINDFUL of what the energy it takes to earn money and where their money goes.
Here are some questions to think about:
Guesstimate how much you've spent in your lifetime on dieting books, videos, products. (Don't include gym memberships you actually use for health or fitness).
What's your annual budget for clothes? If you don't have a budget or know how much you spend you need to. Guesstimate how much you really spend each year on clothes, purses, shoes, jewelry. How much of this is is a need or a want? How much of the dieting or spending is to distract yourself from anxiety or emotional upset? Remember what Peggy Gardiner, the Organizer said: A shopping need is to replace something worn out, a want is anything else. (I think that's a little stringent, but good to think about.) I hope this fuels some thinking & discussion.
If you're in business for yourself how much do you invest each year on education, self-improvement, business or financial education compared to what you spend on dieting or clothing? Be honest and gentle.
"Never use money to measure wealth," is painted on the beautiful sign my sister Lane has in her yard. Lane is a talented, but "starving" artist who is in touch with her soul and with nature - whether bugs or animals and she allows her spirit to express delightfully in her jewelry and paintings. For the most part, she enjoys her life, limited means though she has.
Contrast Lane's world view with the person who works just to "make a living" or as author Vicki Robin of Your Money or Your Life says, "make a dying." I see the appeal of my sisters lifestyle. How many people end up in jobs or careers that they hate, but can't/won't admit it and do something different because the money is good.
How do we measure wealth if not by money? Think about what wealth really means to you and how do we bring a more soulful relationship to our money? Originally money was a place holder or method of exchange that replaced bartering. Now as Deborah Price, author of Money Magic states, "we have given money such power that it permeates every part of our existence."
It's time to redefine what money means to us. We get so driven by making a living, or success that we lose sight of what's most important. I see this shift happening when for example, a friend lets go of overcommitments and focuses on her family and health instead. We need a new understanding of money that wakes us up to our deeper nature and connects us with our spiritual self. We need to respect money, but not make it our God because it's not money that's our problem but how we have defined it. Long ago we created this idea of money, but we have forgotten that. It's time to take our power back and create a new definition that utilizes our heart as well as our head. As we "deepen our relationship with our soul and bring it to bear on our relationship with money" we will experience the inner and outer abundance that is true wealth.
What kind of financial education did you get as a child or young adult? For most of us, it's the school of hard knocks and we make lots of money mistakes by the time we're thirty or fifty. Those of us that are smart take a class or read a few books about money. But, reading a book or taking a class doesn't get at those unconscious or below the surface memories, that fuel our money problems.
When we're children we observe what's happening in our families around money and make up stories to understand and make sense of what is going on around us. Unfortunately, this is not the best way to comprehend the world of money. The Iceberg theory states that 10% of our mind is conscious and the rest is subconscious or under the surface. When your money buttons get pushed and you react instantly - for example, when your wife comes home with a shopping bag from the mall, but hasn't paid the bills yet, that may plug into a childhood memory.
To understand more deeply your current relationship with money takes some exploration. Deborah Price, in her book Money Magic, describes the Mother/Father Mirror Exercise. She suggests you get into a relaxed, "stream of consciousness" state (sit quietly, take a few slow breaths, relax) and allow pictures or images to form of your parents or guardians. Start with your mother and as you get a clear image of her make a list of characterstics, energies or attitudes you attribute to her around money. Then do the same with your father.
Now, gently ask these questions: Which parent do I most mirror in my relationship with money? What aspects do I consider positive or negative? Which characteristics do I embrace or appreciate? The negative characteristics are often the unconscious money aspects we either deny or avoid. They're also the ones we tend to most react to in our partner. How can you allow this new awareness to help you in your current money situation? As we gain new insight it can soothe financial stress and lead us into transforming our patterns, habits and beliefs with money.
You may love the money in your life or hate it, but you are definitely in a relationship. Your relationship with your money could be healthy or unhealthy, conscious and involved or mostly ignored and avoided. Deborah Price says, “We have a relationship with anything we are connected to or dependent on.” Many of us don’t think about or evaluate our relationship with money though it touches our lives every single day. And, depending on how we treat our relationship with money, it can be our friend or foe because it mirrors back to us exactly what we put into the relationship.
If you’re not sure what your relationship with money is try this short exercise: Think about money and write down the first 5 words that come into your mind. As short as this list is, it will tell you something very quickly about whether the part of you that sits under the surface (your subconscious mind) views money as positive or negative. (And, it’s the subconscious mind that we need to understand because it often runs the money show especially in times of stress).
Let’s say the words were something like: scary, overwhelming, secretive, fun, never enough. I’m just making this up now, but if my relationship with money is influenced by this type of “shadow” energy which means what I really think that's under the surface, I may find myself going along just fine, not thinking much about money as long as things are stable. I also may spend money and keep it a secret from my partner because I don’t want them to get “mad” at me, or it’s my way of exerting some control with my husband. When a financial challenge comes along – blam – that feeling of overwhelm hits and I avoid dealing with the money problem, and we know how well that works, right?
So, now what? You may have a glimpse that there’s more to your relationship with money than just your paycheck or the bills you pay. Tune in tomorrow for how to understand your relationship with money by looking at your parents relationship with money. As Deborah Price says your ability to change your relationship with money lies in direct proportion to your level of consciousness or awareness about money. So, let's explore our money relationship.