A Holistic Route to Healthy Finances
A Roadmap out of Debt Hell
by Miriam Green
Vampires chased me through my dreams; it took all my energy to stay one step ahead of them.
I would wake in the morning, exhausted.
I have been through the Valley of the Shadow of Debt. At times I thought the journey-or the Vampires-would kill me. I didn’t know if, or how, I’d make it to the land beyond.
The Route to the Valley
Take one large cauldron. Stir in the following ingredients/debts: "corporate downsizings"; car accidents; divorce; under-employment; single parenting; daycare; private school tuition; home remodeling; college; car repairs. For flavor, add dinners out; tickets to the ballet (or basketball game); new school clothes; and mocha drinks from the corner coffee shop. Simmer and stir. Add interest daily. Be careful that the bottom doesn’t scorch.
Arrival in the Valley
Somewhere along the line, something strange happens. You wake up one day, and realize that you have fallen into the murky brew. Your spoon is now a paddle. You continue stirring constantly, while simultaneously using your oar as a flotation device.
As interest continues to accrue, the brew thickens. The cauldron grows deeper, and wider. The sides now appear as mountains. All fluidity evaporates, leaving behind something that weighs like concrete on your body and soul. You feel scorched, and tired.
You look around, and see a terrifying sight.
Vampires are entities that gorge themselves on Revolving Interest. Give them what they want, and they will increase their demands. Vampires are ruthless, and relentless.
Revolving Interest appears to regular people (whom Vampires refer to as "Consumers") as the Tazmanian Devil® on crack. Revolving Interest is the Perfect Tornado. Revolving Interest is interest upon interest. It is added to your debt daily, and spins out of control at an ever-increasing exponential rate.
Revolving Interest is a culinary delight to Vampires.
Once Vampires recognize you as a Consumer who carries debt, you will have their attention.
Did you think you were going to roll that 0% interest credit card onto another 0% interest credit card, once the "introductory rate" expired? If you’ve maxed out a couple of those cards, the Vampires know it. They have read your credit reportand at any rate, they are all first cousins. Vampires take care of their own. Or they buy each other out.
They Will Simply Stop Sending You Low Interest Card Offers.
Were you paying 0% interest? Soon it will be 9%. 12%. Then 18%. 24%.
Their appetites are insatiable.
Prayers & Meditation
By the time I "bottomed out" (stressed out, freaked out) over my debt load, I carried over $30,000 in "Vampire debt", plus a mortgage, car payment, and retirement account loan. While I was able to pay the Vampires "interest only" payments every month, I could no longer afford groceries.
I knew of a few options: bankruptcy; Consumer Credit Counseling, an organization which helps people coordinate their finances; refinancing the house; selling the house.
I recognized each of these options as Band-Aids, not solutions. In my work as a bankruptcy paralegal, I observed people file bankruptcy, then several years later, do it again. I watched friends go through Consumer Credit Counseling, yet continue to rack up debt. One friend sold her house, and now pays more in rent than she did for her mortgage payment. I had previously refinanced my home to get out of debt, yet I was again in the same Valley.
Surely, there must be another way-a way to healthy finances.
I prayed. I asked the Universal Powers to send me a teacher-someone who could instruct me in financial matters.
Within a year, I had four teachers.
Teacher One Intention
Linda Fromm (GrowProsp1@aol.com, 503-293-3039) is a Master of Conscious Intention. She and her chiropractor husband, John Checkal, operate the Garden House Retreat (a "Vegetarian, Vegan, Raw, Living Food Bed & Breakfast") in Southwest Portland, Oregon.
I attended Lindas weekend workshop on Intention.
Attendees talked, brainstormed, drew, wrote, meditated, read, laughed, hugged-and listened.
I came away from this workshop believing that it was possible to manifest my Intentions.
I also learned that it would be OK (actually, beneficial) to give up those pieces in my life that made me unhappy-for instance, one of my part-time jobs. I could intend that giving up this position would not harm my finances. So I did.
Linda reminded me not to "should" on myself. I "should" do this, I "should" do that. I resolved that I would not allow others to "should" on me either.
Recently an acquaintance said to me, "I am intending, but nothing is happening." I asked him, have you written it down? He said he hadn’t.
Why is it necessary to write down your Intention?
According to the nagual don Juan as relayed by his student, Carlos Castaneda in The Power of Silence, Intention is manifested through the eyes.
The third point of reference is freedom of perception; it is intent; it is the spirit; the somersault of thought into the miraculous; the act of reaching beyond our boundaries and touching the inconceivable. -The Power of Silence, p. 224
I wrote my Intention on a post-it note, and fastened it to the door of my refrigerator with a magnet of "Rosie the Riveter," a symbol of the strength of women who went to work in the factories during World War II. Rosie, in her work shirt and bandana, is flexing the muscles in her arm, saying "We Can Do It!" My Intention: "Solid, Stable, Secure Finances. Target Date: December 15, 2001." I dated it, October 9, 1999. I signed it.
I saw it every day. I thought about it. I resolved to make it happen.
Teacher Two The Practical
Intention was nice, I thought, but I wanted a plan, a nuts and bolts "how to get out of Debt Hell" strategy.
I came across a seminar offered by Dave Ireland (DaveIrelandTexas@cs.com, www.Debtfreesolutions.com, 512-345-0951). Dave, a retired Eastman Kodak executive, teaches a "Back to Black" seminar- "The course that teaches people how to live a debt-free, stress-free lifestyle." I signed up. (Incidentally, Dave is not the only one teaching this seminar. Check the website for local instructors.)
Daves own experience of Debt Hell had to do with putting his kids through college using his credit cards. (Hey, I feel better already, I thought.)
Dave spoke a bit about bankruptcy, and discouraged this option. He enlightened us to the fact that Consumer Credit Counseling, the organization that negotiates on people’s behalf to get their interest rates lowered, is actually a "soft arm" of the collection agencies.
Dave offered a "who to pay first" formula.
Take out a sheet of paper. Make three columns down the page. In the first column, write down the balance on each of your debts. In the second column, write down your minimum monthly payment. Divide the balance of each debt in the first column by its minimum monthly payment in the second column. This is the approximate number of months it will take you to pay off this debt. (For the moment, dont worry about the interest).
Put the debts in order by how many months payments remain on the balance. For example, if you have 24 months left on the car loan, 19 months left to pay F-U Bank, and 12 months left on your credit line, you prioritize to pay off the 12-month debt first.
This method flies in the face of "conventional wisdom" that says pay off the highest interest rate debt first.
"Conventional wisdom" was invented by Vampires. Don’t worry about it.
What you do next is throw all available "extra" money at paying off that first debt. You "find" this money in your current budget, in the various things you currently "waste" money on. Once this first debt is paid, you use the money you were applying toward that first debt (which is now paid), and apply it toward the second priority debt. So you don’t decrease your monthly payments, once you pay something off-you simply redirect that money toward the next debt in line.
Once you get through paying off your credit debts, you turn your attention to your mortgage. Use the money that was going to pay your other debts, to pay off your mortgage. Why? Do the math. When you take out a 7% loan to buy a home, are you paying 7% interest? No. More like 100% interest, or more. Often the amount of interest you pay on a home loan exceeds the amount of the purchase price. Resolve to pay it off.
Dave explained that running the figures on this method shows it is wiser to pay off debts in this order, and before putting aside investment money - that you do come out ahead, in the long run.
Dave sells a few books: Spend Smart - Creating Wealth even with no room in your budget!; Debt-Free & Prosperous Living (text and workbook); and The College Decision Navigator (text and workbook). I bought the books.
If you truly have no "extra" money, and your finances are "upside down" - you are spending more every month than you are taking in--you just have to go get another job, or find some other way to turn your finances "right side up."
Uh huh. At the time I was listening to all this, my finances were "upside down." I was freelancing for about 20 different companies a year, and putting myself through college. I thought, that’s nice Dave, but I can’t work any harder than I already do.
Around this time, some of my 20 different clients/employers started to "go away". They no longer needed me. This was the early days of our current recession/depression.
On the subject of credit cards, Dave offered the following advice: Get rid of them. Cut Them Up. Close the Accounts. Use a debit card instead. Debit cards work like a credit card, except that it draws funds directly from your checking account.
Of course, you need money in your checking account for this to work. And there is one pitfall to using a debit card, as I learned after about eight months of using one: You have to be vigilant about remembering to write the transaction in your checkbook.
I neglected to do this, just once. I consequently overdrew my checking account by about $10. So what happened? The "friendly" bank where I have my checking account has an "overdraft" credit line attached to my account. The way this was initially explained to me, you don’t get charged for the overdraft protection unless you use it.
Vampires lie, dont you know? The $10 overdraft prompted the bank to dump a $200 line of credit advance into my checking account, whereupon they began charging me 21.9% (read: 22%) interest on the $200 advance. Interesting: The overdraft protection agreement I signed last year indicated an 18% interest rate. Guess they raised the rate when I wasn't looking.)
I found out about this a month later, when I got my statement.
Damn those Vampires.
Teacher Three The Emotional
One day as I was running a booth, selling Multi-Pure® water filters at a trade show, I felt compelled to take a (long) break to join the crowd of people listening to the keynote speaker, Suze Orman (www.suzeorman.com).
Suze Orman is a certified financial planner. She writes books and hosts TV specials about finances. Suze held high positions with Merrill Lynch, then Prudential-Bache, before founding her own firm.
Suze gets to the heart of finances-the emotions. She told the story of being in a cab downtown, when she saw an old raggedy man begging for money on the corner. She asked the driver to stop, and got out of the cab, prepared to give the man $20. As she approached him, she saw the man curse and spit at a passer-by who had declined his request for money.
She put the $20 back in her wallet, and got back into the cab.
Suze posed this question to the audience: How often do you repel money?
On a daily basis, we attract and repel money by our thoughts, our words and our actions.
After listening to Suze speak for over an hour, I purchased her book, The Courage to Be Rich: Creating a Life of Material and Spiritual Abundance. I read about the emotions that control people’s financial decisions: Fear; Shame; Anger. And what Suze believes is key to financial success: Forgiveness.
I ask to be forgiven and released by all those whom I have hurt and harmed, and I ask to forgive and release all those who have hurt and harmed me. -The Courage to Be Rich, p. 22
Suze discusses the relationship between a person’s self-esteem, their spending habits, and the amount of debt they carry. Suze notes that a person’s "set point" is the place where they decide to take action about their debt. This also seems to be the point where a person’s self-worth "bottoms out".
I got about 40 pages into Suze’s book. I read that in order to get my finances fixed, I had to "de-clutter" my house. I closed the book, and didn’t pick it up for another year.
I went through closets. I went through drawers. I asked myself, Why does my family have four heating pads? Five umbrellas? Why do I have six coats in the closet? Sheets to a twin size bed I no longer own?
I visualized the clutter as stuck energy, and resolved to move it. I took so much "stuff" to the Goodwill® charity that the attendant asked if I was moving. I took unused art supplies to the local center for grieving children. I took baby blankets to the center for teenage mothers (my "baby" is almost 18). I took old paint to the toxic waste dump.
I burned bank statements for accounts I no longer had, and hired someone to help organize my papers.
Suze also advises to keep only those things that you really want in your life.
I threw away worn-out, frayed towels. I threw away scraps of used soap.
I threw away chipped coffee cups.
And a funny thing happened. I started to feel better. As I gained control over my physical space, my mental confusion over my finances began to clear.
I decided that I would apply for a "real" job, to replace the temporary freelance jobs I worked. Specifically, I determined what the parameters of that job would be. I knew that positions of the type I wanted were "few and far between."
But I set my Intention.
And within three months, I had the desired position.
Something else happened, as a result of de-cluttering. When I walk through shopping centers now, I feel repulsed. I look at all the "stuff" for sale-and it is not appealing.
Caution: If you decide to de-clutter, walk through a couple of antique stores first. Become aware of the things you have in your home that are now considered"antiques." Make your decisions accordingly.
Suze contends that credit card debt is dishonorable debt. In her Courage book, she notes that if you must use one, find the card with the lowest interest rate.
This is "conventional wisdom." As a survivor of the Valley, I disagree.
First, if you are going to use a credit card, resolve to pay it off every month. As long as you do so, the Vampires doze. As soon as you begin carrying a balance, the Vampires eyelids pop open, their canine teeth grow, and they begin licking their lips, joyously anticipating the day when they can jack up your interest rate. If you get into playing the game of rolling the debt onto another card, be aware that youre playing the Vampires game. Dont go there. They are banking on the fact that youll lose.
Second, if you pay off the credit card every month, it doesn’t matter what your interest rate is-as long as your account offers a grace period. Instead, choose to do business with a company you like. I found a credit card company that provides scholarship assistance to students. Dealing with entities that have a social conscience feels good.
If you’re currently struggling to get out of the Valley, rather than rolling the revolving interest credit card balances onto other revolving interest credit cards, if at all possible, it is usually better to get a fixed rate loan. With a fixed rate loan, there is an ending date to the payments.
Mental Models & Social Programming
On the subject of Emotions, it is important to be aware of mental models, which are discussed in Peter Senge’s The Fifth Discipline. Mental models are a person’s interpretations/images of reality the "spin" we internally put on things.
When I was a kid, my father struggled to support six people. Yet he sent all of us kids to private school. I learned the mental model, "A Good Parent Provides a Quality Private School Education for their Child." I grew up believing that, in order for me to be a good parent, this was something I had to do.
As a single working-class mother and college student, private school for my child was beyond my resources. I did it anyway. The Vampires rejoiced.
I hear Linda Fromm’s reminder: Don’t "should" on yourself.
While my father provided for our education, other needs were neglected. Our house was the neighborhood’s unfixed fixer-upper. Our clothes were not so great.
After my divorce, I started dating. One man didnt like my clothing. Another declared that I could fix my home, but I chose not to.
My childhood mental models kicked in.
I could not afford new clothing, or home remodeling. But my self-esteem was low, and I listened to these people. I bought clothes. I fixed my home.
I allowed these people to "should" on me. And the Vampires’ bellies grew large off my interest payments, and they smiled.
As I have journeyed from the Valley of the Shadow of Debt, I have learned to disengage from toxic people who would "should" on me.
I have also learned how to fight the tide-the cultural programming which declares that in order to be acceptable, or beautiful, or patriotic, I MUST SPEND.
I had to simply make my own Declaration: I Dont Think So.
Teacher Four The Spiritual
Bijan is a former Mr. Universe, Natural Division. I was given his book, Absolutely Effortless Prosperity, by my Intention teacher, Linda Fromm.
Bijan (firstname.lastname@example.org, www.effortlessprosperity.com, 702-735-6559, or 800-437-7750) offers Thirty Simple Yet Profound Lessons That Will Transform Your Life In Thirty Days.
Each day of the month has a different lesson in Bijan’s book. The lesson for Day 1 is I Watch What I Say. The lesson for Day 22 is God Loves Me More Than I Love Myself. And so on. Each lesson is explained, and correlates with a "recommended reading" section of the book.
Each day contains the reminder, Remember to keep your word today.
Above all, you are reminded through-out the book that if you want Effortless Prosperity, your goal must be peace.
As I read and re-read this book, some interesting things are happening.
The other day I re-read lesson 3, I Am Aware of What I See. The point of the lesson is to be aware of whether I pay attention to the positive (people expressing love) or the negative (people getting traffic tickets). I realized another benefit, though, in taking to heart I Am Aware of What I See.
I was in the process of refinancing my home, in order to cut several years off the mortgage payments. I was looking over a draft of the closing costs, and noticed that the principal payment payoffs seemed to be too high. I phoned my two mortgage companies, and asked them why this was. They both informed me that they include a reconveyance fee in the payoff quotes. I then noticed that the escrow company was also preparing to charge me two reconveyance fees. I called the escrow company on this issue, and they removed $200 in duplicate charges.
A few days later, I received an itemization from my university for class tuition. I paid attention, and noticed that the school had failed to remove nearly $800 in tuition charges for a class they had canceled. I brought this to their attention.
In just a week, I saved $1,000 by Being Aware of What I See.
Yet the bedrock of all the lessons is Bijans daily admonition to Remember to keep your word today.
I consider myself an honest person. At the same time, I am becoming aware of how often I break my word to myself, and to the Universe.
The other night, before going to sleep, I thought, If only I could wake up early, I would get to the gym and exercise before I go to work. I am not a morning person.
The next morning, for some reason, I woke up an hour and a half before the alarm went off. I thought, I could go to the gym. Did I? Of course not. It was cold and dark outside. I went back to bed.
I broke my word.
The point is, do not give your word unless and until you are sure you are going to keep it. As Bijan notes, to the extent you keep your word, the Universe (God) will support your Intentions.
My journey out of Debt Valley was not marked by any flash of lightning or winning of the lottery. As I embraced the lessons of the teachers, several things coalesced to bring about my present stability.
- I obtained stable employment, and later a salary increase.
- Checks from my "downline" in water filter sales started appearing.
- I received increased child support money.
- My teenager got a job-and kept it.
- I took out a second mortgage, paid off and closed $30,000 in "Vampire Debt" accounts.
- I paid off $12,000 I owed on a retirement loan by transforming the debt into a distribution, and taking enough out of the retirement account to pay the taxes on it. (I questioned the wisdom of paying back a loan to a retirement account that was losing money.)
- I started paying down my car loan with money that no longer had to go to the Vampires.
- I refinanced my home, combined two mortgages into one, and knocked eight years off the payments.
- To avoid "peaks and valleys" in my budget, all regular monthly expenses were put on "equal monthly payment" schedules: car insurance, life insurance, electricity, natural gas, water/sewer, and Internet.
- I started actively seeking ways to save money-borrowing textbooks from the library rather than purchasing; bringing flavored mochas to work rather than going to the coffee shop; and ignoring ads for the latest "sales", so as not to be influenced.
- I budgeted fun into my workaholic schedule-a little reward, you know?
And I became more conscious of factors that throw me off balance: inadequate sleep, excessive work, and poor nutrition. When I am off balance, I try to compensate with convenience, like dinners out, or other rewards.
Balancing my finances meant balancing my life.
As I write this just over two years following the setting of my Intention, my finances are solid. I carry no revolving debt. I have a savings/emergency fund, and a retirement account.
The Vampires are back in their casketsthough they are now inundating me with 0% interest offers.
I burn them.