Monthly Archives: February 2010

Admit Your Financial Problems… To Anybody!

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The human mind is pretty amazing. It has a huge ability for generating thoughts, feelings and even outcomes in your life.

However, it can also generate anxiety. Anxiety is a normal part of who we are. Mind you, some people seem to have more and some people have less. Or is it that some people handle it better?

I had some issues a few years ago and I started going to therapy. My therapist sent me to group therapy. It was very hard for me to go, but what I learned about the necessity of letting things out and talking about my problems to other people is remarkable.

Somewhere we learn that we have to handle everything on our own. Maybe it’s our parents applauding our independence when we’re children. Maybe its the way other peoples’ lives appear to be so much better than ours.

Whatever it is, a fair number of us stop dealing with situations and keeping our thoughts purely internal to ourselves. We worry and we fret and all the while our brain is building tension and pressure. We never tell anyone what’s going on in our heads and we never vent.

This pressure builds and builds and causes all sorts of crazy stuff to happen in our lives.

When I used to drink for instance, if I were internalizing heavily without realizing it, I would have started going out to bars and getting more and more wasted each night in search of relief. I would aim to let out steam by getting loud and acting like a fool.

Nowadays, however, I tend to pound sugar down my throat. As I learn to deal with my emotions and stress, I feel more and more better as I speak out loud about my problems – to my wife, my friends, whoever will listen.

This is one thing that therapy taught me to do – to swallow my pride and admit that I’m not invincible and what I’m freaking out about inside.

Money has so many stigmas attached. First, we don’t want other people to know how much money we make. Second, we don’t want anyone else to know that we’re a f**k up or that we’ve screwed up our lives.

But, here’s the thing. If we don’t get objective opinions from someone else, we tend to let our emotions and our imaginations define our worlds and what is acceptable.

So if I don’t tell anyone else that I have 20,000 in credit card debt and I go to apply for another credit card, my brain tells me it’s ok because I deserve to buy nice things and I deserve a nice life, etc.

If I tell someone else, they should be able to point out that I’m a fool if I buy one more thing with that amount of debt. If they tell me it’s a good idea to go out and spend more, they’re not the right person to be talking to. We want realistic, unemotional opinions, we don’t want enablers who tell us to mess up our lives even more.

Likewise, it is important to vent. Like any other thing that builds pressure, your brain needs to vent. Think of things like clothes driers or car exhaust. If you plugged the exhaust outlets up, what would happen? Nothing good. It would either explode or something inside the machine would burst from the pressure build up.

I really believe that keeping everything inside and trying to handle everything on your own is the best path to stress and failure and physical problems. And I’m not talking about a case of the sniffles here. I’m talking about the biggies – cancer, heart attack, etc.

So that’s the goal. Try letting it out. Leave a comment with your thoughts and/or problems and feel free to email me at any time.

-MG

Which Rung are You on the Money Ladder?

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There are really two ways people are classified financially. That is: “people with negative net worth” and “people with positive net worth”.

Networth, if you don’t already know, is how much you are worth. If you die, it’s how much your heirs will get. If it’s negative, those people inherit debt. If it’s positive, they inherit actual sums of money. Obviously, positive is where you want to be.

Another way to think of it is to picture a ladder in a pool. Some of the ladder is submerged in the water, some of it is at waterlevel and some is above water.

If you have negative net worth, you are on one of the rungs below the water level. If you have positive net worth, you are on one of the rungs of the ladder that is above water.

The more negative you are, the lower you are on the ladder. The more positive, the higher you are on the ladder.

If you are negative, you should be fighting with all of your life to get positive and start gasping those first breaths of air, because frankly, you’re still alive aren’t you?

In coming posts, I’ll give a more detailed description of net worth and how you can determine exactly what yours is. But at this point, I’m sure you can tell if you’re drowing in debt or making financial strides above water.

So which rung are you on the ladder? Leave a comment and let us know.

The Wake up Call that Helped me Get out of Debt

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I was 27 and had just moved to NY. I was sitting on the couch one day when there was a knock on the door. I answered and there was a man standing there who asked for me. I said I was the guy he was looking for. He looked amazed and said “Wow, you’re so young. You really got yourself into a mess here. You’re being sued. Most people with this kind of mess are a lot older.”

He said “have a nice day” as he walked away and my stomach dropped to the floor. I felt sick. I owed a credit card company $20,000.

At that point in time, I had 5 different credit card debts, a car loan and student loans. Most of the cards were for under $5,000, except the one I was being sued for. The car loan was $15,000 and my student loans were for $20,000

I knew I had to do something to fix the situation, but I had no idea what. I was so depressed and I had no idea where I’d get the money. I was drinking pretty frequently to deal with the amount of anxiety I experienced and I was simply paralyzed. I couldn’t make a move to get this resolved and I did what I had always done with this account: I ignored it. I wanted so badly for it to go away. But finally I got a letter that I needed to appear in court.

I started talking to a close friend. She recommended calling a lawyer. I couldn’t. I didn’t have the energy or the strength to admit how badly I’d messed up. But she convinced me. I called a lawyer in my building after staring at the phone for more than an hour. He said in a dickly(adjective: resembling a dick) tone, “How much is it for?” I said “20 grand.” He said “Well you should have paid your credit card! I suggest calling the lawyer and trying to work something out because it will be cost prohibitive for me to work with you.” I was enraged at his lack of helpfulness and desire to take my money(that I didn’t have). I still hold a grudge against this guy. But, his message rang home. I was going to call the company’s lawyer.

As I left messages with the lawyer, I couldn’t get her to to return my calls. I had created a roadblock for myself because previous to this I had sent “cease and desist” letters to all of the collection agencies that were trying to collect from me. This action essentially stops the agency from being able to contact you in any way. It was intended to stop the collection notices and anxiety related to them, but it really backfired in this case. I believe it is the reason they felt the need to sue me.

So I faxed a notice that I was lifting the cease and desist. I got a call from the lawyer the next day.

Much to my surprise, the lawyer was extremely nice. She didn’t seem like she was out to get me as I had imagined the collection agencies were. She was willing to work with me and listen to my arguments and she explained what would be happening in court. I had told her that I requested validation of the debt and she recognized that and said that they were collecting all of the statements and would get them to me soon.

When I went to my first court date, I was ready to tell the judge that I never got the documents, but the lawyer let them know that we were working out the details. That was pretty much the entire first court date.

I had talked to the lawyer a couple more times about settlements. She told me the payment options – lump sums of 20000 etc. I told her “then there’s the other option that we’re not mentioning. Me making a settlement offer of another amount and a certain number of payments.” Somehow, I pulled 15,000 over 2 years out of the air. She submitted it and they accepted it a few weeks later. I had realized that this was $625 and probably way outside of my means. So I tried to back out. But she told me that it couldn’t be renegotiated(in hindsight, I didn’t sign anything, so yes it could have been).

I made sure that paying this debt was my priority. I setup an automatic payment from my bank every month so that I NEVER forgot it. It was a lot of money each month, and I assure you it was painful. BUT, I just paid it off in October and believe me, it was the most PAIN RELIEF I HAVE EVER EXPERIENCED!

Around the same time that I created this settlement agreement, I decided to deal with the other credit cards as well. I sacrificed a lot of the monthly expenses I didn’t need and trimmed the fat out of my budget. I found money by looking at my retirement accounts, savings accounts and everywhere else I could look and I paid off all of my outstanding credit card debts. I was very aggressive at making these debts disappear.

The experience was scary and heart wrenching, but going through it gave me strength I simply didn’t have before. When I got married last October, my wife had a lot of debts she wasn’t dealing with. She was paying minimum payments or she was not paying and her credit was getting nailed. My experience gave me the strength to deal with her debts and to help HER learn to deal with them. I forced her to answer the calls and make arrangements with collections and followed up with “see, they’re not really bad people. You just have to be straight with them.”

What I learned about myself was that all of these decisions I had made financially SEEMED like good decisions at the time. Not paying my cards seemed like a hell of an idea. Especially when I could file a cease and desist and get them to shut the hell up. But there was an underlying bit of guilt that accompanied those decisions. I never realized it until it was gone, but now that it is gone, I feel a hell of a lot better about life.

At this point, I feel myself rocketing toward a better place financially and that simply wouldn’t be possible without this experience. If you’re not dealing with collections, I encourage you to deal with them. Yes, it’s scary. Yes, they say they want all of the money. And yes, you might feel that you don’t have any money to deal with them. BUT, if you can spare $20 a month, make a deal to pay only that amount. Eventually it will get paid off and you’ll feel SO much better.

-MG

How to Get Out of Debt and Get Rich!

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Hi there,
My name is Mike. I’m what I like to call an “average dude.” I grew up in a middle class family in Pennsylvania to a single mother raising four children.

Probably the biggest thing I was missing as a child was a good financial role model, so as I graduated high school, went through college and began my trek into adulthood, I found myself seriously struggling with money and getting myself into some pretty serious trouble.

In the past few years, I’ve managed to save myself from drowning, I’ve had a couple of major victories and I’m starting to get my head above water. Like I’ve said, I’m just an average dude. I’m not a guru. I’m not a saint. I’m not rich and I’m not a millionaire – but I believe I’m on my way.

I know that money is causing some people terrible health issues right now – anxiety, heart issues, stress and relationship issues. If that is your situation, it is my goal to help you by giving insight that I might have into your situation and give you hope by showing the messes that I was in and have climbed out of. It is all about stopping the infinite loop of crap in your life, so that you can start moving in a positive direction – straight ahead and out of the water.

Thanks for visiting,
-MG