Yes to the Dress! (No to the Entrees, Flowers, and Fireworks.)

Weddings are wonderful, but not if they create a financial burden and start your married life out on the wrong track.

Even the most financially sane people can sway to the pressure of outside expectations and the desire to make everything perfect. Add to that the challenges inherent to the tasks of planning (How often do you spend thousands on a party? Negotiate with vendors?). Unfamiliar budget plus unfamiliar tasks, turned up to an emotional simmer... the whole thing can get very out of control.

Read this inspiring story of one couple who kept their focus on what was important: sharing an important milestone with the people they loved, and being financially authentic in the process. What a great way to express love and a commitment to a happy life together. I have a great feeling about Abigail and her DH!

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Fixing Education Debt: Too Much of a "Good" Thing

I work with a lot of artists and freelancers, which makes me particularly sensitive to people's issues with educational debt. Unless you can afford to attend college without borrowing, it is increasingly difficult to pursue any field that doesn't offer immediate and sustained financial success. A writer or designer whose income swings wildly from month to month and year to year is going to be crippled trying to come up with $500/month to send to Sallie Mae. And with no hope of restructuring the loan or having it discharged in bankruptcy, for many folks there's a good chance they'll be paying until they die.

Listen, I get it. I totally understand the argument about fraud and why there should be a high bar preventing people from getting the education and then sticking taxpayers with the bill. But I also see how broken the system is. While I do want to talk solutions, I find it impossible to get to that without two minutes of diatribe first. Here, in no particular order, are the issues that make me get a little mouth-foamy when talking about student loans:

Available money today errodes value sensitivity.
You visit a campus and it's beautiful. All the students look so happy, and they're talking about such interesting things. You think, "This is where I belong." To a teenager about to leave his/her parents' house for the first time, that feeling of fit is supremely seductive. Or maybe the allure is a particular program (I hope it's Engineering) or the status and cache of the school. But whatever it is, on some level you think that if you just get there then the rest of it will all work out.  And because lenders are generally tripping over themselves to lend to you (there's very little risk to them, since discharge is difficult), it's just so easy to get the money to go to school. So you go with your gut. After all, repayment is so very far in the future...

It also obscures the skyrocketing price of education.
Depending on which data you use, the cost of a four-year college is going up somewhere between 7% and 8.3% a year. There are a number of contributing factors, as federal and state funding gets cut and institutions fight to attract students by offering more amenities, but the fact is that costs are going up like crazy and until recently nobody seemed to be too concerned about it.

Loans are given each semester, and not seen in their aggregated total until all the money has been borrowed.
Here $7,000, there $7,000, everywhere a $6- or $7,0000, so grows $100,000 of debt before you even know it. I have heard terrible stories of graduates having panic attacks when they FINALLY get presented with the entire amount of their debt right before graduation. To say nothing of the shock of seeing how fast that debt can grow when you put it in forbearance for a few years while you're trying to find your feet professionally. Oh, and remember: the private loan you took out the first semester has also been growing for the three and a half years you've been in school, too. Interest on interest on interest.

"Good debt."
This makes me insane. Yes, it's better to borrow money to get a Bachelor of Arts vs. spending the same amount on shoes and handbags -- no doubt about it. But for crying out loud, as if that's a real comparison! All debt should be considered carefully, deliberately, even gravely. To give it a blanket "good" moniker belies the seriousness of the situation. Getting a university degree can increase your earning power by a million dollars over the course of your lifetime. But saying that educational debt is "good" side-steps our natural conservativism about borrowing and errodes our ability to think critically about value. 

You're not playing with a full deck, so to speak.
Sorry, 18-year-olds. I know you're a National Merit Scholar and all, but the truth is that your brain isn't quite done forming yet. In fact, the "executive suite" that is your prefrontal cortex, whose functions include "calibration of risk and reward, problem-solving, prioritizing, thinking ahead, self-evaluation, long-term planning, and regulation of emotion" isn't fully formed until your mid-20s. You are an expert on Chaucer and you can recite Pi to 50 digits, I grant you, but you're making a permanent financial commitment that your future self is going to have to deliver on, and you don't even have the part of your brain that can do that yet!

Education debt has a ripple effect over the entire economy.
Young adults can't save for a down payment because that money is going toward their student loans, which means the housing market is slower to recover. Retirement savings starts later for the same reason. People delay having children, and struggle to save for their children's education, and the cycle is in danger of repeating ad infinitum.

Okay, now I'm freaking out and totally mad. What's next?
For the forseeable future, college is going to cost money -- a lot of money. We can spend forever gnashing our teeth and tearing out our hair about it, but at some point we need to take a deep breath and deal with the most important consequences, namely the pressure on borrowers and the drag on the economy.

There are several  groups working on constructive solutions from various angles. Some focus on making repayment more affordable, others on blanket forgiveness for a nation of debtors. I really liked this article that I saw today via LearnVest on Why Student Loan Forgiveness May Not Be as Helpful as You Think. The author suggests a compromise that would act as an economic stimulus: subsidizing existing student loan debt by paying the interest, combined with creating an economic incentive to universities to lower tuition and make school more affordable. This could conceivably enable young people past and future to pump money into the broader economy instead of to the banks.

I think this is a coherent and well-reasoned argument that doesn't get lost in emotion, moral outrage, or good-vs.-evil debates -- which I totally respect, since I had to get on a 500-word soapbox before I was even ready to talk about the article that was ostensibly my reason for this post! Oy vey...

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Anxiety calling! Do you pick up?

I was giving a presentation with my colleague, Annette Lieberman, yesterday when she said the most amazing thing:

"The way people manage their anxiety usually reflects how they manage their money, and vice versa."

Can this be true? We often think about how money gets managed, but we don't often think of emotions the same way. Feelings are assumed to be automatic, almost as if they happen to us. Saying that we "manage" an emotion implies that we're somehow responsible for it.


Whether or not you believe we're responsible for creating our own emotional state, the truth is that we are always responsible for how we respond to it.

Anxiety is the herald that demands our attention. It's purpose is to get us to wake up and pay attention to something. If it feels uncomfortable that's because it's supposed to! We need to be motivated to take action to remove those circumstances that make us anxious.

So think about it: when you feel anxious, do you mobilize to address the cause of your anxiety? Or do you withdraw, ruminate, fret, and get depressed? Can you see a parallel with your money? When financial problems arise, how do you respond -- with action or avoidance? 

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Are your finances a mess? That's curious.

When it comes to money, most of us have a problem-solution mentality. Got debt? You need a plan to get out of it. No savings? Here's a way to budget your way to a fatter balance. Hate to review your accounts? Try the butt-in-chair method.

The limitation with this approach is that most financial goals involve a significant amount of behavioral change, and slapping that "problem" label on yourself means you are probably going to overlook the very insight and information you need in order to change.

Instead of problem solving, try to cultivate an attitude of benign curiosity about you and your money. I say benign curiosity, because when we first start to simply pay attention to money it can bring up a flood of negative emotions and beliefs. We need to be conscientiously gentle and kind to ourselves, or the practice of self-examination feels overwhelming.

Benign curiosity begins with two important premises:

All financial behavior has meaning.

All financial behavior serves a purpose.

So if, when you start paying attention to money, you notice that you've been making a lot of impulsive purchases, try to step back from the self-recrimination for a moment and remind yourself:

I may feel regret about these purchases now, but at the time there was a reason why I felt I had to buy X. What was I trying to do, change, or fix? In what way did that work? In what way did it not?

Benign curiosity allows you to identify the true cause of the behavior and find positive, affirming ways to meet that need that aren't financially destructive. This way when the moment comes again you A) recognize it, and B) have an alternative response ready.

As someone said in one of my groups last night, "It's easier to change a habit than to eliminate it."

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Treating is Fundamental

This morning I gave a talk to the graduating seniors of a prestigious arts college. One of the questions I got asked was how to deal with wanting to treat yourself. "I work so hard," the young man said, "and I feel like I deserve to spend money on something nice for myself once in awhile, even though money is tight."

As far as I'm concerned, you should be spending money on nice things for yourself all the time. I am not the treat police. Completely the opposite, in fact. I feel like meaningful treats** should be part of EVERYONE'S regular spending plan. But treating yourself has little to nothing to do with how hard you work, and everything to do with whether or not you have the money to afford your treat of preference.

When you try to buy yourself a treat that you can't afford just because you "deserve" it, you end up in a mental spiral:

Prosecution: "Do not buy those shoes! You will just go into more debt!"

Defense: "I deserve these shoes! Wait, I NEED these shoes. My other shoes are worn out and scuffed, the heel is broken, and I never have any nice shoes to wear when I have to go out."

Prosecution: "When you have to go out? Really? That's your defense? Maybe you want to try again."

Defense: "Whatever. Work has been making me crazy. I hardly ever buy myself anything. I should get myself something nice once in awhile. Besides -- these are on sale. It would be a waste of money not to buy them!

Prosecution: "Your Honor, the Defense should recuse herself because she is starting to sound insane."

Defense: "Ha! While you were talking to the judge I snuck up to the register and paid for them! Too late!"

And later... the "Defense" is nowhere to be found as you mope about, feeling ashamed that you spent money on shoes that you meant to put toward paying down debt. You're still tired, anxious, and overworked, but now you get to feel guilty and regretful on top of it. How is that a treat?

Buying something on impulse that you can't afford and telling yourself you deserve it is a self-esteem grenade.

A real treat starts with a plan. You think about what would be a meaningful, enjoyable way to spend money on yourself. If it's shoes, great. Or it could be going to the movies, meeting a friend for dinner, or buying fancy bath salts. When you know what it is you want to spend money on, revisit your monthly spending plan. Put said treat item into the plan. If you need to, pare back other expenses that are not as valuable in order be able to afford it. If things are really lean, see if you can identify what it is about your preferred treat that makes it so meaningful, and then try to find a lower-cost alternative (for movies, see if you can set a date with yourself to watch a movie at home with a favorite snack and no interruptions, or for fancy bath salts try mixing your own).

When you consciously and deliberately give yoursef a treat you get to enjoy every part of it: the dreaming, the planning, the selecting, purchasing, and using. Using money as a means of self-care can be an amazingly empowering experience. And THAT can be the real treat!

**For our discussion here, when I say "treat" I specifically mean SPENDING MONEY on something fun, indulgent, or frivolous. I don't just mean doing something nice for yourself.

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National Teacher Appreciation Day

I was always a geeky kid who loved school, so it's no surprise that I can name ten teachers off the top of my head to whom I feel grateful and who I think about with great affection. But hands down, the teacher who had the most significant impact on my life was never my teacher in any particular class, but the teacher who ran our drama and forensics department. She was my mentor, coach, director, and friend.

Kathy Mulay was a perfectionist. And she could be tough. When she cast me in our senior year production of The King and I, I went through a period of rehearsals where I was intimidated to sing in front of the girls playing the King's wives because I thought they had better voices than me. Kathy (Mrs. Mulay then) took me aside and didn't reassure me. She didn't give me a pep talk. She told me that the part was mine and I needed to "get it together." She was the director, she knew what she was doing, and she had given the part to me. It was time to deliver. I remember my blood turning to ice when she dropped this on me. But in the next second I knew I had to deliver. So I delivered.

My decent-but-not-fantastically-exceptional performance as Mrs. Anna aside, the area where Kathy really changed my life was as my forensics coach. Forensics, or competitive public speaking, is not the coolest way to spend Saturday mornings when you're in high school. But for some reason I loved it. I loved to write, edit, and endlessly rehearse my pieces in hopes of winning a trophy. And Kathy would work with me for hours into the evening, choreographing each cross of the room, each hand gesture. Under Kathy's direction I went to the state finals two years in a row, competing my junior year in Informative and senior year in Oratory.

Can you think of a better gift to give someone than the ability to craft and deliver a message that others can understand, and believe? I use these skills every day when I teach classes, lead workshops, and speak at events. I feel so lucky that I can take my passion for helping people bring money into balance and communicate it to as many listeners as I can muster. I never feel nervous in front of a room full of people. I get excited! I know that what I have to say can make lives better, and I don't have to worry about my ability to say it. When I consider that public speaking is one of the most common phobias, I cannot even express my gratitude for what Kathy Mulay has given me. But still I will take this opportunity to say it: Thank you, thank you, thank you, Mrs. Mulay.

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Princess, Post-Doc, Publisher, Mom?

As the mother of two daughters, I want my girls to have dreams as big as the world. Fighter pilot? Astrophysicist? Go get 'em, girls. And yet one of the things that I love most about my own career is that I can organize my schedule to include a lot of mommy time. Half of the week I get home after the kids are in bed, but the other half I can cuddle the baby all day and be there to pick up big sister from preschool. Being a hands-on parent is a priority for me, but it does make for some hard choices when it comes to certain professional opportunities.

The balance that I've created is in large part due to the messages about work, family, and earning that I got from my own mother. When I was younger my mother was a teacher. She enjoyed her work, but even more importantly her career enabled us to survive those years when she was the custodial parent after she and my dad split. A few years later she remarried and continued to teach for awhile, but with a longer commute, another child, and a busier household the main message that I got from her was that it is very hard to be the mother in a two job, two kid family. As soon as we could afford for her to leave full-time work she did, and I remember that there was a lot less stress in the family when she was able to focus on home.

Reading this piece about the "princess mentality" by Amanda Steinberg and referencing an earlier op-ed by Laura Vanderkam, I can't help but think of how complex (and wonderful!) our choices are as women. I am so glad there are voices like Amanda's and Laura's that urge us as women to protect ourselves, to participate in own own financial lives, and to never depend on someone else for our own security. I agree wholeheartedly. There is absolutely no job security in being a princess nowadays.

But while that's undoubtedly true, it's still not exactly simple. My mother also encouraged me to dream big. Fighter pilot and astrophysicist were actually things I wanted to be when I was growing up, but as I got older I pivoted to something decidedly more family-friendly. I'm lucky that I am actually doing work that I adore, and pursuing a career path that fulfills me just as much as being a parent. But do I feel like I threaded the eye of a needle in doing so? Absolutely. And I wonder what message I'm modeling for my girls, even while I tell them to shoot for the moon.

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Huh? (Seth Godin edition)

I've now read this very short post four times and still find myself scratching my head.

When people have their basic needs met, it's not uncommon for wants to magically become needs. It's our hardwired instinct to seek to fill unmet needs.

That pays off for any marketer that has persuaded his market that they need what he sells. It backfires when those 'needs' are seen for what they actually are--luxuries.

When you sell a want, you have to work harder, you must seduce the market, because wants are fickle, picky and not easily bullied.

So is Seth (we're on a first name basis) saying that in this case wants have the same perceived urgency as needs, or is he saying that they are in fact more superficial and thus hard for marketers to engage? It seems like if a consumer experiences a want as a need, he or she would be pretty receptive to a marketer peddling a solution for that "need."

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I Ain't Sayin' She's a Golddigger

Hey, fellas, have you been feeling left out of my recent glossy mag advice-a-thon? Read this article from the May issue of Men's Health where I suggest ways to handle such sticky conversations as your parents' inheritance plan, who pays for dates, and different levels of ambition between spouses.

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Couples Counseling: You and Your Money

Sometimes in my financial counseling practice I feel like a couple's counselor, rehabilitating the relationship between people and their money. (This is, of course, notwithstanding the many actual couples that I treat around money issues. That's a whole other can of worms.)

Sessions can go something like this:

Client: "Make my money stop disappointing me!"

Money: "Make her pay attention to me!"

Client: "Every time I try to spend time with my money, it's never enough. My money is all complicated and needy and it doesn't give back to me. It doesn't take care of my needs. It's all, 'Hey, why don't you keep better records? Didn't you notice that this bill was late and you got slapped with a fee?' I work all day long, and when I get home I just want my money to be waiting for me with orderly accounts and a fat balance! Is that too much to ask?"

Money: "You are acting like a crazy person. No, I cannot organize myself. I can't do anything you don't instruct me to do. I am an inanimate object. Quit projecting your relationship with your mother all over me and just hang out with me once a week! I'm not trying to stress you out. I'm just trying to get your attention because there are things that need to get done!"

What I basically do is what any couples counselor would do: try to bring down the emotional intensity and facilitate communication such that both parties can actually hear each other (okay, really it's only one party that needs to do the hearing).

What clients need to "hear" is their own anxiety. Anxiety has a vital function, and that is to bring our attention to something that needs to be addressed. It's designed to be uncomfortable so that we're motivated to remove its cause.

When we yearn for money to take care of us with no responsibility or action on our part, we're enacting an infantile fantasy. In essence, we put money in the role of a parent whose job is to provide unconditional care and support. For many people who struggle with this financial issue the root cause is a parent who did not do that job sufficiently.

The financial counseling process can help clarify and resolve where money gets tangled up with personal struggles such as this. The "dialogue" above seems silly from the perspective of adulthood, and sometimes just pointing out the dynamic can be enough to help people recognize the impossible expectations they have for their financial life, and to begin to build a solid and mature relationship with money.

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Amanda's Metaphors of the Week

Metaphors are a great way to help people gain new understanding by drawing a parallel with something already familiar. I love metaphors and use them all the time in my coaching work. I'm usually coming up with them in the moment, so sometimes I go a little off the beaten path. Here are some metaphors I've thrown out just this week. Note: it's only Wednesday.

Developing a new financial management practice is like sculpting a figure from stone. You don't jump right in and chisel out the finer details of the face. First you grab a hammer and just whack that stone to try to get a rough shape. After that you refine. But first you're just taking whacks with a hammer. It's not supposed to be perfect.

Money is a neutral energy source. How we direct it reflects our own inner meaning.

A money crisis can bring attention to financial behavior that's been limiting you for years. It's like that compressed disk in your back. Your range of motion has been curtailed for so long you don't even remember what it's like to move freely. This process is like going to the chiropractor. We're going to adjust some things so the behavior will unlock and release.

Our biases and distortions around money are uniquely personal, sort of like your own individual glasses prescription. You may be a +2, the person next to you a +1.25. But this is the distortion each of you brings to how you perceive a financial situation, and with awareness you can learn to correct for it just like you can get corrective lenses.

You say that you have two options right now: to sink or swim. I suggest we add a third: to float. Let's just take moment to pause and gather information before we decide what needs to be done about it. We're just going to float here on the surface, noticing all the parts of the landscape, and take it all in before we feel we have to do anything.

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The Savings Burden

I'm a behavioral economics junkie. I can lose a day reading Kahneman, Ariely, or Benartzi. Helping people overcome cognitive biases and behavioral defaults in order to take care of themselves financially is my life's work.

But sometimes I feel like we forget about the external forces that also support or impede financial goals. The conversation tends to take a decidedly "red state" (personal action and responsibility) or "blue state" (political/macro-economic framework) focus, and we lose the interplay of person-in-environment, which is the "unit" we are taught to examine in graduate social work programs.

I do some work with a non-profit that is in the process of freezing their pension program. To compensate, they are offering employees a 401(k) match up to 6%. In many companies and industries this would hardly cause a ripple, but for people who are already trying to live on a social worker's salary in one of the most expensive cities in the world, this is a huge challenge.

We can employ as million "opt-out instead of opt-in" tricks to get people to contribute more to their 401(k)s, but let's not overlook the great number of people who struggle to save not because of loss aversion, but because they have barely enough money to cover their essentials.

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