October 11, 2018
I am all about helping people get out of financial trouble. I am always humbled when someone lays bare their financial struggle and asks for my advice. It takes such strength to stand in one’s truth, and take the first step toward a better life.
But I want to make sure that we are all on the same page about how to go about rebuilding one’s financial life. The goal should never be to see what you can get out of, or what you can get away with. When you spend more than you can honestly afford, it is on you to repay your credit card debt. When you take out a too-large car loan to pay for an expensive car, and then realize the payments are just too much, it is on you to repay that loan even if you trade in the expensive car.
Getting out of debt is not about getting out of your obligations. It is about managing your obligations so you can pay back what you owe, and then live a more financially honest life going forward.
I was reminded of this when a woman stepped forward at a recent talk I was giving and told me how much I had helped her stand in her truth. But then she proceeded to tell me about all the various debts she had managed to get out of paying–such as credit card bills—as if that was something to be celebrated. And now she wanted my advice on how she could get out of paying back her student loans.
I sure had a strategy for her. It was so not what she wanted to hear.
I want to share my message to her, to make sure all of us are on the same page about what it means to stand in your truth and make powerful decisions about the money you have, and the money you don’t have.
When you owe money, you pay it back. It may take you a long time. It may mean making sacrifices elsewhere in your life. To not honor your financial obligations is not just a powerless money move, it is an act of personal failure.
Please understand that when you don’t pay for something, there is still a cost borne by others. When you don’t pay back your federal student loans, the cost is absorbed by all taxpayers. When you don’t pay your fair share of taxes you increase the burden on your fellow citizens and your government.
The karmic path to true financial empowerment is to always seek to do what is right, not what is easy.
And there is help out there if you can’t figure out how to honor your obligations. At the Financial Credit Counseling of America website you can find a legit credit counseling agency that will work with you to come up with a plan to repay your debts.
Answer Yes or No to the follow statements.
I pay all my credit card bills in full each month.
I have an eight-month emergency savings fund separate from my checking or other bank accounts.
The car I am driving was paid for with cash, or a loan that was no more than three years, and I sure didn’t lease!
I am contributing at least 10% of my gross salary to a retirement plan at work, or I am saving at least that much in an IRA and/or regular taxable account.
I have a long-term asset allocation plan for my retirement investments, and once a year I check to see if I need to do any rebalancing to stay on target with my allocation goals.
I have term life insurance to provide protection to those who are dependent on my income.
I have a will, a trust, an advance directive (living will), and have appointed someone to be my health care proxy.
I have checked all the beneficiaries of every investment account and insurance policy within the past year.
So how did you do?
If you answered yes to every item, congratulations. If you are working on improving on a few items, I say congratulations as well.
As long as you are comitted to truly creating financial security, I applaud you. If that means you are paying down your credit card balances, or are building up your emergency fun with automated payments, that’s more than fine. You are on your way!
But if you found yourself saying No to any of those questions, and you’re not working on moving to Yes, then I want you to stand in your truth. No matter how good you feel, you have some work to do before you can honestly know what you are on solid financial ground.
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Credit & Debt, Saving, Investing, Retirement