The emotions of money.

[Merlocke]

So I started a thread here the other day that offered a way for me to teach folks what I know about money. I'm not saying that I am the guru from the mountain know all be all - but I have seen my share of success and failure as well. Perhaps a little higher success than most - and that's why I wanted to share it with the community.

Now the thread's been moved (by my request) but what I'm wondering is why there is so much either greed, or fear, or anger generated by bringing up the subject of money?

Think about it - people are too afraid to talk to one another about money, and what happens is that people then never get the chance to learn about it. If more people had understood how mortgages work for example - could we have avoided the situation that the economy is in now?

So what I'm hoping to discuss about in this thread is to hear other people's thoughts about why money is such a difficult subject to speak about. I understand people's hesitance to not want to share "private" information with some dude on the internet (my previous offers) but what is it about money in general that brings up this kind of hostility amongst ourselves?

If people were more knowledgeable about money - wouldn't fewer people be taken by ponzi schemes and bad investment practices?

[Baraka_Guru]

Most people would sooner speak openly about politics, sex, relationships, or religion than they would about money. It's that ultimate taboo; you just don't do it unless you're really close.

Money is definitely tied into emotions. It makes people stupid: not having enough, having too much, in between.

I'm on the not having enough end of things. I know how money works; I just don't have any. If the average person woke up tomorrow with my debt-to-income ratio, it would emotionally crush them. Financial advisors would say, "There's nothing I can do to help you other than tell you to make more money and pay off your debt."

My issue is that I'm a severe perfectionist with a fear of both success and failure. I'm in the spot I'm in because of emotions, and so that's what makes me a good example of what emotions and money can do. I feel like I'm not good enough, talented enough, experienced enough, qualified enough to make more than I do. As a result, I've had the same mediocre job and same pay for over 5 years.

At this rate, I'll be lucky to be debt free some time in my forties. Maybe then I can start a retirement plan.

Yes, I know. I suck.

Emotions and money, yay!

[Xerxys]

Yeah, I've had this thread open for four hours and I have absolutely no idea how to respond. I like your thread. I do. I am all things money it's not even funny. I listen to mad money by Jim Kramer and then listen to all the other financial pundits. My TV is usually tuned to CNN or MSNBC in the ungodly AM hours when I am awake and have absolutely nothing to do.

The thing about money, I assume, is lack of control. Think about it. People can be incredibly level headed during times of crisis. Crisis involving illness, tragedy, etc etc. They can be all kinds of open and talkative about sex and how one self proclaimed straight guy happened to stare at another mans penis and go "damn, that thing is huge, he must slay it every time he sits!" without doubting his sexuality. But when it comes to money, it's either you have very little and are a failure, or have too much and is greedy.

Money is the "be all end all" of validation. Face it, it buys everything. EVERYTHING. Love, happiness, Jet skis. Everything. You may want to intellectualize the situation and say, "you can be happy without a lot of money" but truth is, you won't emotionally believe that.

Not only is the validation pertinent, but so is the necessity. You need money to eat and sleep everyday. You keep on thinking about just how much money you need to pay the bills and when you finally have enough money to pay bills you think, "I need a reward for all this crap. Life is too short then you die without ever knowing what Syphilis from a Puerto-Rican hooker feels like."

We deal with money everyday but it's emotional ramifications are tied to it's necessity. It's effects are somewhat numbed by the constant contact. It's not like sex, I can afford to think about sex all day because I don't get it all day, nor do I need it all day.

[Cynthetiq]

In my mind money gives me options and choices, well beyond which iPhone or iPad I will buy, but really how will I fund my future desires and goals?

I'm not a good saver at all. Not when I'm focused on it, I'll save too much and then it's too painful to spend it. I have learned simple moderation of saving, and the simple thing of letting time be my friend. Last year I started a thread about saving $3/day, something very simple and tangible for people to be able to do. Almost no one took me up on the offer to track this ability to save the money and make a large purchase in the future. Mine wast to be a new ipod touch. Turns out when the time came, I had the money but saw little value in buying the item as soon in the near future the model will be updated making my purchase obsolete. Thus I never purchased it, but I do have the money saved, all cash, without breaking a sweat.

I don't know why people have their hang ups. I'm like you, I'm happy to share my strategies as to how I've remained debt free since I was a teen and how I've been able to leverage money into future income streams.

[Baraka_Guru]

Originally Posted by Cynthetiq

I don't know why people have their hang ups.

You can't rationalize the irrational.

[Merlocke]

Originally Posted by Baraka_Guru

You can't rationalize the irrational.

I think this sums it right up really.

[seamaiden]

I'm basically starting over in my 50's. I come from lower middle class, hovering around the poverty line really, and it's expensive to be poor. Having made a lot of bad financial (and relationship) choices in my youth, I'm far from financial freedom. I may be debt free in a few years, but without a savings there will be no early retirement for me.

I know that "money makes money" but the money I make already belongs to someone else. I lease a car, rent an apartment, and the only RSP I have was acquired when I divorced...it's a LIRA account that's still struggling to regain what it lost a few years ago...and certainly wont provide much comfort in my old age.

Having said all that, I'm happy with my life. The bills get paid, we eat well, and our home is safe. Sure, I'd love to have more fun money, but we seem to find ways to have fun without it.

[Merlocke]

It's not so much that everyone NEEDS to be a millionaire but rather so much that everyone that's interested and willing should be given an opportunity to learn how money works. I grew up in a poor neighborhood as my parents were the first generation to move to Canada, and for that I will be ever greatful as the opportunities here are almost boundless. It was east Vancouver, now still known as one of the poorest districts in the country.

When I was younger, my dad had an appliance shop, and it was doing well as appliance shops can go. When the business took a turn for the worse however, there was a time when we lived in the same warehouse as the appliances he repaired and sold. I appreciate everything my father has done for our family as he was quite the handyman, he built and hooked up a shower system, and later a hot water tank to keep the kids clean and and and comfortable.

He ran other businesses on the side as well, and it's where I learned the ability to speak in public. It's also where I learned to grasp opportunity. I am however not as trades inclined as my father, and am terrified that if placed in the same situation would not be able to handle it as well.

It's why I'm thankful that he introduced me to a financial planner who took the time to explain concepts to me, and how things worked from time to time instead of just selling us insurance, never to be seen again until it was rrsp season. This guy also earned 6 figures early on in the industry because of that very reason. He took the time to teach others that were willing to learn.

In the beginning, money was a taboo subject in my family, but when it became more of an open topic - that everyone could speak more freely about, we could chip in to help each other as a team more often than if we had kept it quiet and to ourselves. The subject had shifted from fear and greed to one of supportiveness and cohesiveness within the family, and I believe that it was a major ingredient in my previous success.

A really good book that has changed my life is the book Rich Dad, Poor Dad by Robert Kiyosaki. The way he openly speaks about money seems at least for me to take the mystery out of the problems and make it a team sport for his family to become and remain successful. Mind you money isn't the only thing that matters, but if everyone has a hand in helping out with full openness and a stronger overall understanding in any subject, then I believe it become much less of a problem to deal with long term. Once it becomes a team effort - you talk about it less fearfully and can enjoy the more important things in life with less of a burden.

My wish is to give others the chance I was given by sharing ideas openly in the other threads I've began. Perhaps I'll find a great future business partner that will be a joy to work wih. Perhaps we'll realize my simple goal of making the tfp community self sustaining without the need for donations. Which by the way funny enough when it happens, actually INCREASES the amount of donations as well. I don't claim to know everything, but I do have a willingness to share and Learn as well. Isn't that what community is about?

Thanks to everyone that has shared so far, and I'm looking forward to see what sharing strategic ideas in the open can do for this forum.

[GreyWolf]

Back when I did financial counselling, I was surprised to find I was the guy getting the "toughest" cases. My colleagues told me that dealing with people with addictions, family/marriage problems, personality issues, were all easier than dealing with debt crises. They said people will seek help for a mental or physical problem, a relationship or sex issue, or just about anything else long before they will admit they have a money problem. A big part of it is that we are all brought up to be responsible for our own financial well-being... to take care of ourselves.

There are medical and mental health professionals, and we see those areas as basically beyond an individual's control. Relationships involve other people, so it's difficult to control more than your own side of that. You can't be responsible for the other person's actions/reactions.

But MONEY... we're all supposed to know how to handle it. So few of us do. Admitting we are a failure financially is the ultimate in self-betrayal. So no one wants to, and no one wants to seek help. By the time they do, it's very late in the game.

That being said, I've always told my clients & friends that money should NEVER be a life-goal. What it can do for you... bring peace of mind, security, allow you to do things you otherwise couldn't... those are worthwhile goals, and money can be a means to them. But it shouldn't be the end.

The only book that I push now is called The Wealthy Barber, by David Chilton (available in Canadian & American versions). It should be required reading for highschool students. It isn't revolutionary in its concepts... its actually quite conservative. But it's readable, and enjoyable, and lays out the basis for a sound financial future in easy to grasp terms. (No, I don't know David personally... wish I did, lol)

[Merlocke]

Originally Posted by GreyWolf

Back when I did financial counselling, I was surprised to find I was the guy getting the "toughest" cases. My colleagues told me that dealing with people with addictions, family/marriage problems, personality issues, were all easier than dealing with debt crises. They said people will seek help for a mental or physical problem, a relationship or sex issue, or just about anything else long before they will admit they have a money problem. A big part of it is that we are all brought up to be responsible for our own financial well-being... to take care of ourselves.

There are medical and mental health professionals, and we see those areas as basically beyond an individual's control. Relationships involve other people, so it's difficult to control more than your own side of that. You can't be responsible for the other person's actions/reactions.

But MONEY... we're all supposed to know how to handle it. So few of us do. Admitting we are a failure financially is the ultimate in self-betrayal. So no one wants to, and no one wants to seek help. By the time they do, it's very late in the game.

That being said, I've always told my clients & friends that money should NEVER be a life-goal. What it can do for you... bring peace of mind, security, allow you to do things you otherwise couldn't... those are worthwhile goals, and money can be a means to them. But it shouldn't be the end.

The only book that I push now is called The Wealthy Barber, by David Chilton (available in Canadian & American versions). It should be required reading for highschool students. It isn't revolutionary in its concepts... its actually quite conservative. But it's readable, and enjoyable, and lays out the basis for a sound financial future in easy to grasp terms. (No, I don't know David personally... wish I did, lol)

I second that - it's a very good read. Thanks for bringing that book up! It's been years since I've read it. Perhaps it's time to give it another go.

[Baraka_Guru]

Originally Posted by GreyWolf

The only book that I push now is called The Wealthy Barber, by David Chilton (available in Canadian & American versions). It should be required reading for highschool students. It isn't revolutionary in its concepts... its actually quite conservative. But it's readable, and enjoyable, and lays out the basis for a sound financial future in easy to grasp terms. (No, I don't know David personally... wish I did, lol)

The Richest Man in Babylon by George Samuel Clason is pretty good for that too. Chilton's book is a modern-day narrative that goes through basic money concepts. The Richest Man in Babylon came years before it, but the concept is the same: a narrative teaching basic money concepts.

The biggest difference is that that Clason's narrative is historical fiction, taking place in ancient Babylon. I found it more engrossing for this reason, though the end result is the same: these books teach and delight, which is a potent mix. Note: Clason's book comes in a "modernized" version that switches out the sometimes annoying King James English (though it was written in the 1920s) with Modern English.

[Ourcrazymodern?]

(Damnit, I just lost a perfectly irrational post! Ah, well, here's another.)

We've been believing
in the concept so long we're
unsure we're not right.

Fear of death led to belief in what doesn't change.

[raging moderate]

The problem with Robert Kiyosaki is that, if you look into his actual strategies, it's more of a get-rich-quick scheme than any kind of actual instructions for long-term wealth. Buy low, sell high. Find a house that is for sale for much less than the value, buy it, sell it at value, make money. that's fine, assuming everyone selling real estate is a complete moron. he is a good writer and makes an excellent pep talk, but as for real advice, he comes up somewhat short.

lest i be accused of stepping on one idea without suggesting another, my financial guru of choice is Dave Ramsey. I'm not in cahoots with him or anything but he gives really good, sensible advice for real people trying to make their financial lives better. Stash a small emergency fund, snowball your payments by paying off the smallest debts first, rejoice in your successes, use your smaller paid-off debt payments to compound payments on larger debt, repeat. It was my strategy for paying off debt and it as worked outstandingly well. I've yet to find an house underpriced that i was able to buy and then sell outright for profit, but by paying off debt and then using that monthly payment amount plus the payment on the next smallest debt, and so on, i was able to get rid of almost all of my debt without considerable hardship.





edit: PS in our house, we discuss money on a daily basis. We go online to see our bank accounts and make sure we are on track for our budget, we make nearly all purchasing decisions together, and we work towards our financial goals together. that's the most important thing - to set goals and work towards them. to quote whoever said this, if you don't know where you're going, you'll probably end up somewhere else.

[Cynthetiq]

Originally Posted by raging moderate

The problem with Robert Kiyosaki is that, if you look into his actual strategies, it's more of a get-rich-quick scheme than any kind of actual instructions for long-term wealth. Buy low, sell high. Find a house that is for sale for much less than the value, buy it, sell it at value, make money. that's fine, assuming everyone selling real estate is a complete moron. he is a good writer and makes an excellent pep talk, but as for real advice, he comes up somewhat short.

lest i be accused of stepping on one idea without suggesting another, my financial guru of choice is Dave Ramsey. I'm not in cahoots with him or anything but he gives really good, sensible advice for real people trying to make their financial lives better. Stash a small emergency fund, snowball your payments by paying off the smallest debts first, rejoice in your successes, use your smaller paid-off debt payments to compound payments on larger debt, repeat. It was my strategy for paying off debt and it as worked outstandingly well. I've yet to find an house underpriced that i was able to buy and then sell outright for profit, but by paying off debt and then using that monthly payment amount plus the payment on the next smallest debt, and so on, i was able to get rid of almost all of my debt without considerable hardship.

edit: PS in our house, we discuss money on a daily basis. We go online to see our bank accounts and make sure we are on track for our budget, we make nearly all purchasing decisions together, and we work towards our financial goals together. that's the most important thing - to set goals and work towards them. to quote whoever said this, if you don't know where you're going, you'll probably end up somewhere else.

I believe Kiyosaki makes most of his money now more from book advances and royalties than he does from his other touted investments.

re: properties
There's lots of properties out there to be purchased that are undervalued. They exist all over the world. One just has to know what to look for usually it's not a turn key property to purchase and flip. Most are fixer uppers in some capacity, some list as fixer upper, sweat equity, needs work, or something indicating that you need to put some effort into the property. It would be best if you could do the work yourself, and save some more money. Or you could do like I do and include that into the cost of doing business and cap the amount to a reasonable price, somewhere in the $5,000 range to get the property sale/rent ready. Money for this can come from a HELOC (home equity line of credit) or your credit cards that you've paid off (not suggested.)

[lurkette]

I think part of the reason why money brings up such strong emotions and reactions is that it is the ultimate signifier: it is nothing but pure symbol, and so it gets imbued with all kinds of stories and significance. It's rarely just about the math, it's about power, self-worth, your perception of yourself as a moral or immoral person, etc. Especially in Western society where for so long poverty has been associated with some sort of personal failing and moral flaw.

[Merlocke]

Originally Posted by Cynthetiq

I believe Kiyosaki makes most of his money now more from book advances and royalties than he does from his other touted investments.

re: properties
There's lots of properties out there to be purchased that are undervalued. They exist all over the world. One just has to know what to look for usually it's not a turn key property to purchase and flip. Most are fixer uppers in some capacity, some list as fixer upper, sweat equity, needs work, or something indicating that you need to put some effort into the property. It would be best if you could do the work yourself, and save some more money. Or you could do like I do and include that into the cost of doing business and cap the amount to a reasonable price, somewhere in the $5,000 range to get the property sale/rent ready. Money for this can come from a HELOC (home equity line of credit) or your credit cards that you've paid off (not suggested.)

Actually I think Kiyosaki is making more from his seminars... have you ever seen the prices? 5k to see him and his experts talk. And by talk I mean pitch you 20k courses.

Now mind you I should clarify - the book changed my life because it got me off the couch. It doesn't ever actually tell you WHAT to do, or HOW to do it, it just inspires you to get up.

For a book with a little more "how to" behind it. There's Escaping the Middle Class - by Doug Anderson. It's not an exact step by step - but at least it gives more of an outline as to structure.

[Baraka_Guru]

Originally Posted by Merlocke

For a book with a little more "how to" behind it. There's Escaping the Middle Class - by Doug Anderson. It's not an exact step by step - but at least it gives more of an outline as to structure.

Escape the middle class? I'd be happy to get trapped into it. Maybe I need a couch-ejecting book of my own.

[ring]

I'm content with my somewhat Thoreauian existence spiced with a pinch of the ascetic.

I forget who said the following, so I'll plumb the shallows of my memory vault, and paraphrase:

"The more stuff you own, it ends up owning you."

[roachboy]

i have a conflictual relation with mister money. i have trouble making myself keep track of it. sometimes that's ok and other times it isn't. i suppose not keeping track adds an element of adventure to otherwise banal affairs. but it's a stupid kind of adventure.

i don't quite know how i drifted into this relationship in which money is ok to spend but not worth thinking about not to mention keeping track of.
it's probably intertwined with old lizard brain things reinforced by the special kind of broke a boy without a trust fund gets to be in a ph.d. program if he has the above mentioned kind of relation to money. so it probably started out as an anxiety management strategy.

but it hasn't really done me a whole lot of good.
but i've had fun.

now i'm more cool with it.
ok that's a lie.
i'm working on it.

it's just so stupid a thing to think about.
ugh.

[ring]

If we define money as the current paper & coin that changes hands
& changes according to an area's current rate of exchange,
that's one form.

Bartering service for service is another not so different, yet entirely different
form of payment.

My cousin trades three bent-willow rocking chairs he's made, for dental work.

I smell the fear of those who fear not having enough funds... afraid of being regarded as unworthy;
by thy self, peers, larger pools of peers...

"It's just so stupid a thing, to worry about."

[Ratman]

Problems about money are never really about money, rather the lack of it.

[Baraka_Guru]

I'm in one of those nasty situations where I make a little and owe a lot.

I always chuckle a bit when people talk about "disposable income." What an odd term. The word disposable has that connotation of something one could throw away and not have to worry about. If that were the case, I don't think I'd ever have a disposable income.

My money is pretty much accounted for each month, and there's nothing left over. I don't have a disposable income, when you consider the most sober definition of the term. I haven't had one since before moving out of my parents' place back in 1998.

This is why I don't need to heed people when they talk about cutting expenses, controlling your spending, or participating in Buy Nothing Day. To me, cutting expenses and controlling my spending means cancelling my World of Warcraft account to save $15 a month, and perhaps only going out once in a given month (and try to spend less than $40 when going out). There is very little else where I can save money. I've done everything else, mostly. But at the same time, I don't want to lose my mind.

I go several days without buying something, so Buy Nothing Day to me is like a Read the News Day; I do it most days, but occasionally there are days I don't.

[Lindy]

Originally Posted by Baraka_Guru

I'm in one of those nasty situations where I make a little and owe a lot.

I always chuckle a bit when people talk about "disposable income." What an odd term. The word disposable has that connotation of something one could throw away and not have to worry about. If that were the case, I don't think I'd ever have a disposable income.

My money is pretty much accounted for each month, and there's nothing left over. I don't have a disposable income, when you consider the most sober definition of the term. I haven't had one since before moving out of my parents' place back in 1998.

This is why I don't need to heed people when they talk about cutting expenses, controlling your spending, or participating in Buy Nothing Day. To me, cutting expenses and controlling my spending means cancelling my World of Warcraft account to save $15 a month, and perhaps only going out once in a given month (and try to spend less than $40 when going out). There is very little else where I can save money. I've done everything else, mostly. But at the same time, I don't want to lose my mind....

B_G, your pain is palpable. It shows in your posts in this thread. You don't need to save money. My financial "guru," Dave Ramsey, would say that you don't have a debt or extravagant lifestyle problem. But you know that. You have an income problem. And things are not likely to get better until you find some way to change that side of your financial equation. I don't know what that change would be. I know you enjoy your work very much, but is it, in the long term, (buzz word alert--) sustainable? You sound weary, so probably not. If not, better to change sooner rather than later. Perhaps you need to learn new skills. Ejecting from the couch, as you said. And, as uncomfortable as it may be, leave behind the poor but honest intellectual paradigm. Embrace a more bourgeois attitude.

Originally Posted by raging moderate

...lest i be accused of stepping on one idea without suggesting another, my financial guru of choice is Dave Ramsey. I'm not in cahoots with him or anything but he gives really good, sensible advice for real people trying to make their financial lives better. Stash a small emergency fund, snowball your payments by paying off the smallest debts first, rejoice in your successes, use your smaller paid-off debt payments to compound payments on larger debt, repeat. It was my strategy for paying off debt and it as worked outstandingly well...but by paying off debt and then using that monthly payment amount plus the payment on the next smallest debt, and so on, i was able to get rid of almost all of my debt without considerable hardship.

I don't want to get too evangelical here, but "the Gospel according to Dave" was a big part of my journey from deeply in debt divorced 23 year old exotic dancer to property owning 33 year old investment fund manager with a master's degree. Verging on wealthy and living well below my means. Change can happen.

Lindy
Verging on wealthy, yes, and on the road in a 26 year old car.

[Baraka_Guru]

Meh.... I should have been a furnace man like my father.

I have too many "soft skills," intellectual as you say. Maybe if I started using them for evil instead of good?