Fearless Money

As I say on the sidebar, I used to be afraid of money. That was a bad strategy.

My own fears

Despite the fact that I’ve regularly earned six figure incomes over the last decade, I managed to amass a load of debt and basically no savings. I’m a smart fellow, I’ve done all sorts of interesting things which required a lot of analysis and thought, yet until last summer I never really set out to learn about and work on my finances. In fact, I used to remark to my wife that if I put half the effort into my finances that I did playing games or programming, I’d be a very wealthy man.

The way I learn is that I get passionate about something, I read everything I can on the topic, I talk to people, and I experiment. Basically, I obsess for a while and I end up with a new skill or hobby. I think I didn’t want to "do" finance like this because I was afraid of what I’d find. I was right, what I found was unpleasant. The way I am, once I really know something (as opposed to simply strongly suspecting it), I have to take action.

Taking action - first steps

After reading for a while, I started out with Dave Ramsey’s plan as presented in Total Money Makeover. This was great for me, since following his "baby steps" forced me to get my finances all lined up. I worked for hours and hours on spreadsheets to nail down exactly where my debts were, and the time it would take to pay them off at various rates. His snowball plan is overly simplistic, and I agree with others who say that his reasoning is poor about paying off the lowest balance first in all cases. But the basic plan is good.

I’ve paid off and closed 6 cards already. Don’t give me that garbage about keeping unused cards open for the credit score. The hit is minimal at most, and the recommendation to keep the cards open is purely fear-based. If you pay off debt and you make good money, your score will go up in the long run, period.

The turn-off

Where I got turned off was in listening to Dave’s radio show, and in reading some of the other “get out of debt” writers/bloggers. It seems to me that they are entirely too fear-based. I will go out on a limb and make a claim based on pure gut feeling. "No one ever got wealthy out of fear." No one gets wealthy by focusing their life on getting out of debt.

Yes, that is an important step, but it cannot and should not be the focus of one’s life. I think Loral Langemeier said it very well in her book The Millionaire Maker”, when she said (I paraphrase) "”That sort of life sounds perfectly dreadful to me.”" You know the life I am talking about, the one where not only should you scrimp and save, eat beans and rice all the time, and obsess about cutting lattes from your life now, but you should do so forever, since there’s always retirement to worry about. As my two-year-old would say "Yeeccchhh!"

Attracting wealth

I think there is a lot to the notion that you attract into your life that which you think about most of the time. If you are fear based, and worry about making ends meet all the time, well then you are likely to make ends meet. That’s about it. If you instead are always thinking about building something great, something which will not only feed you now, but make you wealthy in the future, well then it seems to me you are much more likely to get to that end as well.

Personally I prefer the latter. But neither you nor I will ever get there by focusing on being a cheapskate, by obsessing about avoiding debt at all costs, or by any other technique primarily motivated by fear of money.

Technorati Tags: money philosophy, debt, wealth attraction