How I Developed a Healthy Money Mindset
I have walked a long, winding road when it comes to money. In fact, for the longest time, my relationship with money was not just complicated; it was downright dysfunctional. It has been a rocky journey, but I have finally reached a point where I can confidently say I have developed a healthy money mindset. Just as regular exercise is essential for maintaining a healthy body, I must consistently cultivate my relationship with my finances. Here is how it all happened.
The Unhealthy Start
Like too many people, I did not grow up with an ideal model for handling finances. While I grew up in a hardworking, blue-collar, immigrant family, money was often tight, and discussions about finances were scarce. When money was talked about, it was usually to complain about not having enough or being burdened by credit card debt. The absence of a healthy financial dialogue in my household set the stage for my own money missteps as an adult.
College Debt and Early Adulthood
When I was a freshman in college, I got my first credit card. Banks were practically throwing cards at students, and I was no exception. I maxed out that card almost immediately; it had a limit of around $300. I recall the struggle to pay off this debt, given the limited hours I worked at the campus dining hall.
After graduation, I entered the workforce with an initial salary of around $60k – more money than I had ever seen in my account. The irony is, I had majored in economics and worked in finance; however, I still had no discipline with personal finances. I was a full-on consumer: car loan, unchecked spending, and a nonchalant attitude toward my $20k in student loans. I was making money, but I was not properly managing it.
My Wake-Up Call
Life has a way of throwing curveballs, and mine came around the time of the Great Financial Crisis of 2007-2008. My company stopped doing any new business. I was not laid off, but I could see the writing on the wall. That was the first year I did not get an annual bonus, which was usually over six figures. That year, I got what we called a donut (because it is shaped like a zero). I usually spent beyond my means and heavily relied on that annual bonus to payoff any outstanding debt. Now I was stuck with tens of thousands of dollars in credit card debt. In addition, I was still carrying my ~$20k in undergrad student loans, which I could have easily repaid in better times.
Feeling lost and unsure of my future, I decided to go back to school for my MBA. Despite landing a fellowship that covered tuition, I continued to live beyond my means, taking on more debt to cover living expenses. I was a ticking time bomb.
Before going to business school, I had hired a financial planner but made no progress. I eventually drained my IRA which had peaked around $250k, treating it like an extra bank account. I was desperate, hitting rock bottom. As a last resort, I signed up for food stamps (a month before I found a new job in finance). I remember waiting in line to sign up for food stamps; hoping no one would recognize me. In line at the grocery store, I nervously swiped the distinctively white government issued card. Later that day, someone texted and asked if I was just at the grocery store. Embarrassed, I replied yes. Despite lowering the brim of my New York Yankees hat, I was still spotted.
My Turning Point
Desperation led me to seek meaning beyond myself. I finally realized what I was seeking. I was seeking freedom from compulsive negative habits, not material possessions. I finally realized my financial ruin was just a symptom of my underlying emotional dysfunction with money and life.
In a desperate attempt to find meaning beyond myself, I began attending church, where the congregation just so happened to be reading Dave Ramsey’s The Total Money Makeover. I was inspired to take control of my financial destiny. I started listening to Dave Ramsey’s podcast every day, drawing inspiration from others who had struggled with debt and came out on top. I loved hearing callers scream “I’m debt free!” As Dave says “Money is 80% behavior, 20% head knowledge. It’s what you do, not what you know.” I needed to address the negative habits of my financial life.
My Key Takeaways
- Emotional Fitness First: I had to get my emotional and spiritual fitness in order before I could tackle the numbers. I needed a strong why; a reason to change my financial habits.
- Seek a Plan: I needed guidance. Thankfully, I stumbled across Dave Ramsey and then hired a financial advisor. Although I later took control of my own finances (see link), the experience forced me to think about my retirement age and future financial goals.
- The Power of “No”: Being broke taught me to say no. I stopped being the ATM for friends and family, which was a silver lining in my financial struggles.
- Emotional Healing: I knew I needed something greater than myself to change my actions. I came across a book called 10-Day Money Makeover, which focuses on improving my relationship with money through the practice of the Emotional Freedom Technique (EFT). EFT is a technique that involves tapping on specific points on my body (like under my eyes) with my fingertips while focusing on negative emotions or physical sensations to release emotional blockages. This was an early and crucial step in developing a healthy money mindset.
A New Chapter
Today, I have developed a healthy relationship with money. I have turned the page on my past financial misadventures and am now focused on a stable and prosperous future. If you are struggling with money, you do not have to hit rock bottom to start turning things around. A healthy financial life is possible, and the first step is deciding whether you are ready for a change.
