I had no way of knowing it at the time, but my financial situation had already hit rock bottom and the next 6 years would be a steady climb upwards in the right direction. Of course, my financial anxiety would never let me see it that way.
Welcome to the Making of a Millionaire daily rundown. Every Thursday I’ll bring snippets of F.I.R.E Starter stories. Case studies of people who have achieved Financial Independence, Retire Early (F.I.R.E) In addition to tips and critiques of the F.I.R.E movement.
The Limited Mindset Caused by Financial Anxiety
Whether we realize it or not, money impacts nearly every aspect of our lives. When most people sit down at a restaurant and receive the menu, the first thing we look at is the prices. When we walk by a store in the mall and see “SALE” written in big red letters it gets our attention. Money impacts our daily decision making.
For some, particularly those who have struggled to make ends meet, the feat of not having money fills us with a constant nagging anxiety. We are constantly living under the belief that we will run out of money. This is how I felt when I had about 800 problems of which 799 could have been resolved with more money.
For years my financial anxiety kept me in a constant state of “Defence”, I felt like if I was anything less than perfect in my decision making or execution that I would lose it all. For a while, this might have been true. For instance, when I was completing my master’s degree the math as it relates to my personal finances was very tricky. On the “money going out” side of the equation I had my tuition, rent, groceries, textbooks, my minimum payments on my $50,000 worth of debt and on top of that was sending money back home to help with my parents rent. On the “Money coming in” side of the equation, I had my funding from the university (about enough to cover tuition and groceries) and money I made waiting tables.
If I were to pinpoint the genesis of my financial anxiety it would probably be the moment I got fired from my job waiting tables. I needed any job that I could find and may have lied about having more experience than I did, waiting tables. I did have experience bussing tables at several restaurants but the only experience I had waiting tables was at a tiny sports bar which mainly served beer and nachos, both products I was intimately familiar with.
This, however, was a completely different beast. It was what you would call a “fine dining” restaurant. I was no longer serving beer and nachos but things like duck and “Cornish hen”. The Wine list had dozens of different wines and I was expected to recommend specific wines that complemented different entrees. My only experience with wine at this point was buying it in a box at the cheapest possible price and drinking it out of coffee mugs.
I am sure by this point you have figured out why I got fired from this job. Here’s how a typical interaction with customers went for me.
Me: Hi there, can I start you off with something to drink?
Customer: What kind of wine do you recommend?
Me: We have a great red wine.
This was not the type of restaurant, nor where these the type of customers, to which “we have a great red wine” was an acceptable answer.
It’s amazing what humans are capable of when the consequences of failure are so severe that it is no longer an option. I had enough money to pay that month’s rent but had no idea how I would come up with the next month’s rent. Time was not on my side, I had worked out that I would need to get a job within 3 weeks to get my first paycheck in time for next month’s rent.
Long story short, I managed to land a statistical consulting gig within two weeks. I sent out literally hundreds of applications, replied to every ad in the classifieds and Craig’s list, talked to every professor who might need a research assistant. Finally, I landed the consulting gig my following up on a post I saw on Facebook, two weeks after I lost my serving job. This period of my life can be best described by Tony Robins quote “If you want to take the fu*king island, burn your fu*king boat”. My boats were burned for me, but it forced me to take the island, the consulting job was significantly more lucrative than the serving job and helped me eventually land my “career” job.
I had no way of knowing it at the time, but my financial situation had already hit rock bottom and the next 6 years would be a steady climb upwards in the right direction. Of course, my financial anxiety would never let me see it that way. I still had a significant amount of pressure which lead to several years of “small thinking”. I was always on defense, I would wake up every morning and repeat the same mantra “don’t get fired”. This defense-first mentality spread into all areas of my life. Constantly with the feeling that one misstep could prove fatal, so don’t take any chance.
My rational brain would remind me that every achievement I had in life was the result of taking a risk and betting on myself, but then that anxiety would come in nagging at me that “if you screw up this opportunity you may never get another chance”. It remained this way until I stumbled upon Mr. Money Moustache and learned about the concept of “financial independence”.Learning that people (regular people, not “rich” people) were able to save and invest enough to replace their income by their 30’s and 40’s was revolutionary.
Accepting that “Financial Independence” is possible for me, flipped the switch in my head. I was no longer playing “not to lose” but I was playing “to win”. I had one simple roadmap to Financial Independence: find ways to spend less money, find ways to make more money and aggressively pay down debt, save and invest. Rinse and repeat.
Today the debt is gone, my wife and I own a house we live in, we own the second house my parents now live in and I am investing and on the path to financial independence. I have a long way to go, but the fact that I now believe I can get there helped me break free from my financial anxiety. I still hear the nagging voice of anxiety in the back of my head, but I don’t let it impact my decision making. The positive thoughts about my current and future financial situation are more powerful than the negative thoughts about my financial past.
From Broke And In Debt To Successful Financial Planner
Learning To Manage Money From School of Hard Knocks
Joe, who I mentioned is now a financial planner and personal finance expert was not born with any special intuition about money. Like many of us (myself included), he learned about money the hard way, through trial and error.
He describes coming from a family where money was rarely talked about. When he did hear his parents talking about money he says that money and financial decisions were always discussed in terms of “payments” as in, can I come up with the monthly payment to buy this thing I want? Note that “can I come up with the monthly payment?” is a VERY different question than “can I afford this?”.
With the exception of a house (or sometimes a car) there is a simple way to know if you can afford something; if you can buy it in cash you can likely afford it, if you need to talk out a loan to buy it, you cannot afford it. Simply being able to make the payment is a great recipe to stay on the financial treadmill.
That is where Joe describes the beginning of his financial journey. When he was in college he signed up for a credit card, immediately maxed it out and was in collections within 3 months.
Raise your hand if you have ever been in a similar situation! (You can’t see me, but my hand is straight up in the air).
To Learn how Joe turned his finances around and became a successful financial planner and Podcast host, Continue Reading
This article is for informational purposes only, it should not be considered Financial or Legal Advice. Not all information will be accurate. Consult a financial professional before making any major financial decisions