I’ve had this nagging though rattling around in my head for the past few years – the thought that you’re not getting the right conversation when we talk about your personal financial situation.
Yes, you’re in debt. You’ve got student loans to pay, credit cards that are through the roof, and other bills that are piling up faster than snowflakes on the windshield in the middle of a Northeastern winter morning.
You’ve got debt collectors hounding you, and they’re not willing to cut you a break in spite of your best efforts. You’re worried about judgments and what they’ll mean for your paycheck if a garnishment hits just as the rent comes due.
We’ll talk about defending the collection lawsuits or filing for bankruptcy to give you the chance to start rebuilding your finances. During the course of my representation we’ll go through your budget, and if the numbers are completely unrealistic then we’ll go over them until it all makes sense.
And yet.
We’re Treating The Symptom, Not The Cause
You got into your financial situation as a result of an unforeseen problem. The problem wasn’t the unexpected medical bill or the fact that you lost your job and couldn’t find work for longer than you expected.
Your problem was the fact that your income didn’t exceed your expenses by enough to give you a cushion to ride out the tough times.
When we first meet, you’re going under for the final time. Your financial problems are so bad that you can’t swim to safety without a helping hand.
But once you’re out of debt, there’s no safety net in place to keep you from falling down again.
Your income still barely covers your expenses. And the next financial calamity is right around the corner.
The average American puts less than 5% of his or her disposable income toward savings, according to the Bureau of Economic Analysis. Not only that, but 43.9 percent of American households have less than three months worth of living expenses in their savings accounts.
We Need to Change the Conversation
When you’re in financial difficulties, the conversation needs to include a deep dive into how you’re spending your money. We need to focus on making improvements in your personal rate of savings, and talk about ways to cut your expenses while maximizing your income.
We need to start looking at ways to make sure you’re never going to need my help again in the future.
Anything less is like a heart surgeon sending you on your way after a triple bypass without setting you up with a plan to lose weight, quit smoking, and start exercising. It’s a recipe for disaster, and a surefire way to all but guarantee that you’ll be back again with the same problem someday.
A Marathon, Not a Sprint
Budgeting, saving money and planning for retirement is a long-term commitment. It doesn’t happen overnight, and it’s not a “set it and forget it” sort of thing.
Life changes, and so do the ways in which you spend and save your money. You’ve got to adapt over time, making small changes to help keep you on track.
I can’t tell you it’s going to be easy, but it will be valuable. After all, do you really want to live on the finance precipice of disaster for the rest of your life? Do you relish the thought of being one paycheck away from being broke?
Or would you rather be able to sleep soundly each night, comfortable in the fact that you and your family are financially prepared for whatever life throws at you?
How I Fit In
My role needs to evolve as well, from being merely the guy who fixes the immediate problem to the one who functions more as a long-term guide.
As of this writing, I’m not sure what that means. Whether it’s a newsletter with tips on how to keep your money in line with your plans, a course or something else I’m not sure.
I’ll ask you for your input along the way so I can be sure to deliver what you need, in a way that makes the most sense to you.
One thing’s for sure – we’ll keep talking about this subject right here, as well as elsewhere.