Stressing Out over Money
Posted by Gail | Filed under Life Lessons
If there’s one thing I can guarantee it is that if you pick up the reins of your financial life you’ll feel less stress. People are always stopping me to tell me just how fabulous they feel now that they’re doing something instead of twisting in the wind. So if you’re sick and tired of feeling sick and tired of your money problems, then maybe today’s the day you do something different.
If you’ve got a whack of debt – and our debt levels are rising faster than our incomes – you know that buying pretty much anything you want even when you don’t have the cash to pay for it comes with a huge price-tag: stress. Spending the credit you have on plastic or through a line of credit is only delaying the consequences of “not enough money.” Ultimately you’re going to have to pay back all that money you borrowed. So rather than stressing out about it, do something: create a debt repayment plan; find a way to make more money to pay off the debt; stop spending money.
If your PSR (personal savings rate) is smaller than a gnat or completely non-existent you’re in plenty of company. Not good company, mind you. Saving nothing now is a sure way to have nothing later. Sadly, you won’t even know how tight a spot you’ve put yourself in until you’ve got no space left to turn around. The only way to shake off the inertia of not saving is to start saving. And it doesn’t have to be a lot. I’m sure if you really put your mind to it you could come up with $50 a month. It’s a start. Get started.
If you have no emergency fund, or if you’ve bought that Tall Tale that a line of credit can be an emergency fund, it’s no wonder you can’t sleep at night. Since most people live to within a hair’s breadth of their income, just a small slip would be enough to put you into a fix. One in four people say they couldn’t deal with a $5000 emergency. One in ten couldn’t handle a $500 emergency. And two-thirds of people 18-34 say they’d be in trouble if their paycheques were delayed by a week. Wow! Talk about stress. The only way to cope with life’s unforeseen miss-steps is to have some money in the bank. I’m talking cold hard cash.
If you’re all tied up in knots about the gyrations in the stock market, maybe you should be in the stock market. Investing comes with risks. Some of them seem less frightful, but every single investment has some risk attached. You have to gage how much risk you can manage and then choose investments that don’t leave you holding your breath. My new book, Never Too Late, which will be out in January can help you to decide exactly what types of investments best suit you. If you can’t wait until then, read everything you can lay your hands on about risk tolerance and investment time horizon.
If you’ve bought into the demographic scare – boomers are a huge demographic force and their retirement will put the economy into a tail-spin – I can help assuage some of that fear right now.
Yes, the boomers are a huge force – almost 10 million large in Canada. But the Baby Busts born between 1967 and 1979 (5.4 mil) and the Echoes born between 1980 and 1995 (6.9 mil) aren’t exactly small potatoes. Between them they are bigger than the Boomers. So chill out. There will be plenty of economic power spread across our kids and their kids… and their kids’ kids. Don’t get all gloomy and doomy about this. There are some things you have control over, and some you don’t. Focus on the things you CAN do.
The cure for stress is “action”. Do something. Don’t just sit, wringing your hands and staring at your navel. Learn. Plan. Act. Take control of your money and your life. Develop some good financial habits and you’ll reap the peace of mind that comes from doing the right thing.
September 3, 2010 at 7:43 am
As our money dry spell came to an end on Wednesday I calculated how much of our emergency fund we used to top up the EI to cover all our very basic expenses. $5600. During those months, which included Christmas, we really scaled our budget back, more than I thought possible. I made our laundry soap, hubby made our bread. Our entertainment budget was $0, and I mean 0, we never went out except for a walk. So I can totally offer feedback on the merits of an EF of cold, hard cash. Although never spending on entertainment had its own stresses, we slept just fine at night.
September 3, 2010 at 9:02 am
We have often been in the situation where DH’s paycheque was late in getting to him by a week. We had that happen over the summer, then when he deposited 2 cheques at the same time (he gets paid weekly), the bank withheld both cheques for an additional couple of days because we had no money left in that particular account at that point, with not him not having been paid in 2 weeks. Luckily, we had other accounts with more than enough money to cover our expenses, and it was more annoying for us than stressful, but I wondered how others would have been able to manage. We were some ticked with the bank though. We’d been dealing with the bank all of our adult lives, and my husband has had the same employer for the last 10 years, so they really shouldn’t be holding cheques — they don’t hold your direct deposit! It was a reminder that the unexpected can come up.
September 3, 2010 at 9:07 am
I remember the days of having stress that’s associated with too much debt. We were drowning, and all I ever thought about was where the money was going to come from to pay the bills. I had trouble sleeping and eating. It was a tough time. Then I decided to rein it all in.
Our situation is not perfect, but I have much less stress, and I sleep better at night, knowing that a $500-$5000 emergency wouldn’t send me screaming into the night.
Thanks Gail for showing me the error of my ways, and providing me with the tools to dig us out of our hole.
September 3, 2010 at 9:12 am
I was doing really well until I hired a nutritionist and started a diet. It was as if taking control of one area in my life, required letting loose on another area.
I was looking forward to my Friday morning zen with Gail, but now I’m stressed LOL! Which is probably a good thing…. Maybe now that the diet is more natural day to day, I can start monitoring the finances more closely again.
Have a great weekend all!
September 3, 2010 at 9:20 am
Having a plan and a budget has absolutely eased the stress in my world. It makes months like ‘back to school’ Aug/Sept far more manageable because there is a plan. It shows me what I can buy if I save up for it and it shows me how much I can save if I pay down faster.
It’s a beautiful thing.
September 3, 2010 at 9:33 am
How I spent my summer vacation – looking at my regular expenses and finding ways to cut back – like I changed my cell phone from a monthly, expensive cadillac plan I didn’t need to a “pay per use” $100 card plan which will last me a year. Savings – over $600 a year…that extra money is going in the vacation fund!
Even when you are on track and debt free, looking regularly at your expenses to see if you are getting the best deal, where you are wasting, and where you can cut back is still a good idea.
I’m through worrying about money, although I am concerned that in this economy, my emergency fund isn’t where it should be so I will be looking for ways to bump that up over the next year.
September 3, 2010 at 9:45 am
I’ve been working at building and refining a workable budget over the last year or so. I’m happy to report that even after falling right off the wagon for a while in terms of tracking expenses (we got married this summer and at a certain point there was just too much going on to track easily!) I’m in pretty good financial shape. The budget feels comfortable, my wedding expenses didn’t exceed what I had saved for it by too much, my line of credit is paid off and I’m still on track to build a solid emergency fund and pay off those pesky student loans within a year! The benefit of all that is that I’m sleeping REALLY well at night
September 3, 2010 at 9:56 am
I can finally say that a $5000 emergency would not break the bank, thanks to Gail’s advice about getting an emergency fund up and running. Last year at this time though, I would have had to rely on my LOC to manage a $5000 emergency. Such progress!!! It’s amazing the difference a year can make!
And we certainly sleep better now, but will sleep even better down the road when we’ve got a bigger cushion saved up. We’re on our way – following our fearless Leader Gail down the golden path to financial freedom!
September 3, 2010 at 10:02 am
I stress about money, a lot. I’m not in any debt but I’m living on my own for the first time while going to school. I did a budget with the money I saved from scholarships and my summer job, which just stressed me more. There really isn’t enough money. My parents tells me not to stress, focus on school (only 18 months left) and rely on them, which just makes me feel bad. oi.
September 3, 2010 at 11:18 am
The only time I ever felt stressed about money was when I bought my first house. I did not like the idea of a mortgage and years of interest hanging over my head. At the first opportunity I paid a lump sum and increased my monthly payments considerably. It took eight years but I finally got the house paid off. It was such a relief. I made sure that my next home home was afforable and I able to purchase it without having a mortgage.
September 3, 2010 at 11:29 am
For the past few months I have not been following a strict budget. I used to track everything to make sure we could afford all that we needed. I just feel so alone in my relationship doing this. My husband has no idea when bills are due or how much is even saved. It is so frustrating that I just gave up. It doesn’t mean that we are hurting badly, we learned our lessons from the past and am positive it won’t go completely out of control. I stress that we won’t save enough!
I’m in the middle of reading the millionaire next door, and it stresses me out:) Between pursueing higher educations, having UAW parents, getting gifts from his parents (whatever my husband asks for..only child) our net worth is 1/4 what is should be based on our age. If we could work on getting to 1/2 that would be excellent…I don’t need to be a millionaire but 500,000 net worth would be amazing:) I just don’t want to become a statistic single senior citizen living in poverty.
September 3, 2010 at 12:03 pm
The budget reminds you of the limit of your financial resources.
It reminds you that you have to make choices instead of having it all at once.
So you try to find extra ways to make money or look for a better paying job. When that does not happen, the stress goes up. The reminder that finding another job that will maintain your standard of living seems near impossible is a source of stress. I don’t know when I will ever feel comfortable enough to sign on the dotted line of mortgage papers.
September 3, 2010 at 12:06 pm
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September 3, 2010 at 12:47 pm
My husband and I are in the process of buying a SECOND home as a revenue property that my father in law is renting. It is so stressful to think we will be on the hook for TWO mortgages! BUT we have saved up to make sure that we are actually in a comfortably margin monthly. Also,we wanted to be sure that if the market tanks, we will still have roofs over our heads!
The pressure (and heavy guilt) was put on that if we didn’t buy the place that the FIL was renting then he’d be out on the street. Since we have always wanted a revenue property, we took it as a sign that it was time to take the leap…. we will be landlords by the end of September…. at least we can trust the tenant.
Money has been a source of stress as far back as I can remember… either a complete lack of it, or trying to manage the “disposable” income responsibly and reasonably. Knowing that I’m not saving ENOUGH for retirement ever…. that has to be the most painful thing.
September 3, 2010 at 12:48 pm
I keeny recall the days when a $500 emergency would have sent us into a tailspin. We’re feeling a lot better now with an EF growing weekly!
Thanks for those stats about the boomers Gail. I had a feeling that things couldn’t be as gloomy as some seem to think.
September 3, 2010 at 1:42 pm
Its so true how stress levels correlate with debt levels!!! The last time I remember losing sleep was before my wedding, last year, because it had spiraled out of control. At the time, the stress of planning the wedding, getting ready to move, and (yikes!) getting married itself, was time consuming, which didn’t leave much time for workng on the finances. Anyhow I’m glad thats over, it was worth what we spent on it and now I can rest east focusing on our future (the first house!! the first baby!!)
September 3, 2010 at 1:45 pm
I feel so much better after putting my debt repayment plan in place 3 months ago. The road is still a little bumpy, but really looking forward to the future.
September 3, 2010 at 1:53 pm
Gail,
I have finished reading your book and the example of the couple that uses the Payday loans twice (paying nearly 11,000 interest annually) is a great example of the practicality of emergency funds.
My wife and I have a simple ING account that we have that does everything automatically.
September 3, 2010 at 3:30 pm
I’m happy to say I’m getting happier with our financial situation, at least from the savings perspective. Thanks to dear Gail and her shared wisdom, there is now $5000 for an emerge and a RESP account for our kids this year (the gov’t really does give you free money lol). This is a BIG Achievement for us! We still have the debt to contend with, however I can sleep at night “NOW”, knowing there is some $ in the bank. Quite honestly, I have to look at the bank balances every other day just to stay motivated and on track esp when the debt gets me down. Now I know we’ll conquer that one as well. Its so reasuring to see the $ there!!!!!!
For those of you out there who haven’t started your emergency fund START TODAY, whatever amount. Those dollars will turn into hundreds and those hundred into thousands …the peace of mind is priceless! FYI – Our debt is from the past – a job loss, not making enough money and using our line of credit…the legacy lives on a few years later. Cash and savings is where its at…if only I had known (& done something about) that a few years back.
Have a good long weekend everyone (hopefully uneventful with the storm)
Lisa
PS Thanks for sharing, I love reading everyone’s posts, we have so much to learn from Gail and each other =)
September 3, 2010 at 4:38 pm
Money used to stress me out alot. I would look at my online banking a gazillion times a day and make a gazillion different budgets. About 4 years ago I started saving regularly. I was able to save EF to the tune of $3500 in just a couple months. Not bad for a 23 year old single gal at the time. I have never stopped and now my H and I sleep easily know we have 9 month EF to help us in case of job loss or illness. I love the fact that if we a have a car repair bill we can take it out of other savings and not have to worry about touching our EF. Having money in the bank has helped me tremedously. I grew up with a mother who was always stressed out about money. So I think thats where I get it from. I quickly realized the only solution to the problem was to have get my finances in control and get them to a very comfortable point. I count my lucky stars that we don’t have money stress in our lives. I love that there is no pressure on our relationship by money either.
September 3, 2010 at 6:59 pm
Megan, I’m impressed! 9 month EF saved in only 4 years! That’s awesome! We’ve almost got 1 month saved and our goal is to eventually have 9 months saved too. Good for you, and so early on in your adult life! Wish I had known what I know now when I was your age!!!
September 4, 2010 at 2:51 am
It’s great to see so many people inspired to establish an emergency fund. Everyone has to start somewhere. I read a great quote somewhere on the financial webring forum before, it went something like “the best time to start was 20 years ago, the second best time to start is now”…I can’t recall the source though.
September 4, 2010 at 5:01 am
I have had a complete summer of money stress! I fell and broke my ankle 12 weeks ago, at a point where both the full time job and part time job pay periods did not have much earned to help out. The heavy schedules were upcoming, so there was next to nothing to tide me over till EI finally started, about 7 weeks into the injury! Their 55% contribution to my well being didn’t do much to relieve my stress/recuperation time either. I did not have the EF started yet – and it wouldn’t have been much regardless. I did have Disability insurance on my truck loan, but that in itself was like swimming upstream to get in place. I am just now being reimbursed for the payments I made until insurance took over! And that is only because I have been phoning both the insurance and bank at least 3 times a week to inquire about the status. By pestering the Insurance company, I was able to get them to send payments earlier than they intended, and provide me with the details, dollar values, dates, etc. Thankfully I did this, because the Bank claimed to have received one cheque, but not the other, and of course I could not be reimbursed my payment till they received both. Well, more phone calls, and discover from Insurance company that BOTH cheques were cashed on the same day!! Another week of phone calls to clarify that, “Oops, we did cash the cheque, and somehow it got applied to another client’s account”! If I had not been so ’stressed’, and on top of this, someone would have had a $700 + bonus in their account! I am sorry if I am rambling, but Gail stresses having Disability Insurance, and I have been trying to find some company that offers Wage loss Insurance. I am paying almost $30/month to cover a $400/month payment, and believe that this is way too high, but can’t find anything out there. My employer offers Long Term Disability (after 6 months), but surely, someone offers a reasonable cost Wage Loss Insurance? Long story short, I am scheduled to return to work on the 13th, reduced hours, (EI deducts $ for $ anything I earn in this ‘hardening off’ process!), and I will have to push myself to speed through the weeks of RTW – I can’t afford not to! The stress of being injured and trying to get all the parties on the same financial page has been enormous. Work will seem like a vacation after the summer ‘vacation’ I have had!!!
September 4, 2010 at 10:15 am
@Suzanne….as an FSR at a bank I encourage folks to have disability insurance (my husband and I have always had it and have put it to good use when my husband could no longer work…we werent’ far into the 30k vehicle loan when we had to use it…insurance made all the payments for us but yes, it was a poky start getting all that paper work done, but each year they sent us another doctor form and once they rec’d that we were approved for payments for another year)…anyhoo, the point I am making is that if any of my clients need to make a claim I help them with the paper work and follow up…that way they have ONE contact person in the branch and they will have their contact person with insurance…much easier!…hopefully you won’t need to utilize this again but if you ever do, I encourage you to have a realationship with one person so that you can have some help…this was way too stressful for you…if you can’t get good service at the branch you are at switch branches (you don’t neccessarily need to switch BANKS sometimes it’s just the branch you’re dealing with)…anyway, that’s my two cents worth…I hope you have a less stressful time going forward and can just heal and get back to life…take care!!!
September 4, 2010 at 11:50 am
We are just starting the process of setting up an EF. We have just enough saved right now to cover one mortgage payment. My plan involves all the money earned from extra shifts to go directly into an EF (since that money can’t be regular enough for added income in a budget) and all regular earnings can go into the living expenses and debt repayment. We’ll give it a go through the end of the year and see if it is reasonable. Hopefully soon we can make regular EF deposits beyond the extra shifts…as I would hate to sabotage our baby steps to DFF!
September 5, 2010 at 11:31 am
hi, my husband and i are terrible at saving but i started the jars today hoping this budget will work i love the till debt do us part show i know it can work we have no ef or savings we live pay check to pay check we want everything our living expenses are high but we are trying for a loan mod and have decided to sell if it doesnt go through we are both committed to this budget from this day forward after doing the calculations we are spending 600.00 more each month than we make (i feel better this wasnt higher truth be told) we dont have credit cards thank god not anymore so the only debt we really have is this house and cars wish us luck we are gonna need it
))
September 6, 2010 at 3:54 am
Excellent blog. Very interesting numbers on the boomers and the up and coming work forces.
Am suggestions on how I can obtain these numbers for the US market on the younger work force.
Wishing you great success.
September 7, 2010 at 4:52 pm
Sparky, thanks for the comment. Unfortunately, my loan is not with my own personal bank. The insurance company is not with the bank at all, so I was dealing with Montreal and Vancouver! Thankfully I learned a long time ago to document every word in these instances, and had some good ammunition for the calls. What I am trying to find is a company out there who offers General Disability Insurance for EVERYTHING. I feel that $30/month insurance payment to cover a $400/month truck payment is a little steep. Surely there is something out there that would offer wage loss insurance for a similar price? Does anyone know, because I sure can’t find anything. All in all, the whole procedure has been a huge eye opener, including the $30 a pop to have a doctor provide a note that gives you ‘permission’ to be off work for medical reasons. I am actually looking forward to getting back to work in a week, even if only for 3 hours a day, every other day. Like kindergarten, it’s a start right??
September 9, 2010 at 12:20 pm
This is so great. My stress levels have dropped immensely since taking gails advice and getting a handle of my finances. I can now tell you my balances by heart and feel good knowing I have a plan and that I am working the plan vs trying to figure this out along the way. My marriage is much better from Gail’s advice.