Your Fears Are Naked

It’s easy to imagine that reading this blog, a reader might become confused.

Since I spend so much bandwidth writing about money, and how to save it, and how to avoid paying taxes on it, and how to spend it wisely, the natural tendency might be to assume that I am inherently inclined to be a “money person.”

You know the kind of guy of I’m talking about: The type who always saves his money. The type who started investing at a young age. The type who just naturally budgets.

But the fact of the matter is this: I only became interested in money recently, once I made the connection between money and freedom, once I realized that wasting money was equivalent to wasting my time and to wasting my own independence.

And in the period prior to this renaissance I made plenty of financial mistakes.

I carried credit card debt.

I opted not to pay med school debt during my internship, residency, and fellowship.

I forgot to renew a deferral on my med school loans when going from residency to fellowship. (And suffered a black mark on my credit report for seven years.)

I borrowed against my 403B account.

I used interest-bearing loans to buy cars.

I borrowed money from family, with interest, in order to make a down payment on my house.

And the reason why I bring up all of these foibles actually has nothing to do with me.

You see, I had a conversation a few weeks ago with one of my young non-physician coworkers.

She was saying how much she hated thinking about money, and that she didn’t have any clue how to clean up her dismal financial situation.

Over the course of our Conversation I gathered the following information.

• She takes home about $4500 a month.
• She has about $18,000 worth of high interest credit card debt.
• She has some student loan debt at a 6% interest rate.
• Her housing expenses are about $1000 a month.
• She eats out and goes out for drinks a lot.
• She contributes nothing to her 403B account, not even up to the matching amount by our employer.
• She really has no idea where the non-housing portion of her paycheck goes.
• She owns two powerful blenders, a Vitamix, and A “magic bullet” blender, and recently purchased a second magic bullet blender, when her first one broke!
• She often finances travel on her credit card.

From which I concluded the following.

• She has a great salary, and should be able to climb out of this hole very quickly.
• Her credit card debt is an emergency, And one that can be dealt with at minimal cost in 15 months by transferring her debt to zero interest credit card and paying it down fast.
• She should make minimum payments on her student loan debt for now, and look into loan forgiveness opportunities.
• Her housing costs are very reasonable for her level of salary.
• There is no room in her budget for nonessential items like eating out or buying bar liquor when there is an ongoing credit card emergency. (Though there will room be soon enough if she takes decisive action now.)
• She is not in a position to say no to free money, as in our companies match.
• She would do well to start paying attention to her spending.
• Having more than one blender is overkill for anyone, let alone someone in a financial emergency.
• If she gets her act together, she can start playing the miles game and travel to more and better places for free.

So needless to say, I found this very exciting.

I often wistfully think back to the financial mistakes that I made earlier on in my life. And I find myself wishing I could have given young Miles a good talking to.

Fire up the flux capacitors.  I’ve got a loan deferral to fill out…

Here then was my chance to help someone else right their own financial ship.

So I sent her an email with a couple of links including a link to a good 0% APR transfer credit card, and offered to sit down with her and come up with a plan that would have her on solid ground within two years.

She said she was interested, but I didn’t hear back from her for a couple of weeks.

When I talked to her again the other day, I casually asked how everything was going with the financial plan. And she said something along the lines of:

“I’m just so afraid of what I’m going to see when I start looking at my financial situation, that I can’t even make myself look.”

And almost immediately I realized that I have this same sort of aversion to things that aren’t going well in my life. (And I told her as much.)

On a similar note, I don’t think it’s coincidence that I became so interested in budgeting and money at a time when I had more of it.

But this is not to say that being more conscious of it wouldn’t have helped me tremendously in my younger years.

It is human nature to turn away from that which makes us uncomfortable.

But the sad fact of the matter is that the things that make us most uncomfortable, are exactly what we should be focusing on.

That’s where we can get the most bang for our buck.

If you are obese, you should be thinking about what and how much you eat and how much you exercise (which will be the hardest things for you to think about.)

If you’re short of breath and a smoker, you should be thinking about quitting cigarettes (which will be the hardest thing for you to think about.)

And if you are in a situation where you find yourself in more and more debt, you should be thinking about how to better spend and save your money (even if it is the hardest thing for you to think about.)

Because the solution is right there in front of you.

And it almost never starts with an act of great heroism or strength or luck.

What it does tend to start with is an act of courage.  Courage and organization in equal measures.

The solution starts by simply facing reality and recording it. And if you are in debt, it starts with paying attention to where the money goes. And then paying attention to how much you’re saving. And then paying attention to how much interest you are paying.  And finally when the debt is under control, how you invest your surplus.

And after the accounting begins, in my experience, the fear starts to go away. It is demystified. And the only thing you’re left with are simple daily decisions whose effects you can soon measure as progress.

And it almost becomes a big fun game. At which point you can’t really help but keep on playing it some more (and winning.)

It’s as if the maleficent emperor has been shown to be wearing no clothes. The sense of dread and doom that you once associated with your debt becomes an emotionless score in a game. And you are obviously catching up.

In this way your debt is demystified and made manageable.

Most importantly there becomes an obvious relationship between your new spending patterns and the shrinking size of your obligations.

You are in control.

Which raises the question: What are you afraid to face? And would taking an honest accounting of it help you to overcome this obstacle?

Please leave comments below.