Hunters Bay Radio
ASK THE MONEY LADY FINANCIAL STRESS AUGUST 31 2024
This is the Ask the Money Lady radio show, where we answer all your questions about money. I'm Christine Ibbitson, and thank you for joining me today. I want to talk about how to deal with financial stress. This is something we all experience, no matter what age you are. As soon as you become an independent adult and move out from the family home, well, you're in it. The financial stress will follow you all your life, no matter how much you have. It will always be there in some form or another. Financial stress comes from debt, and to be honest, none of us can live without it. You can't afford to buy a home for cash these days, it's just too expensive. So you have to go into debt to be able to purchase a home. And next to a home, the second biggest spend, would be your vehicle, which you also need if you don't live or work in the same area like in an urban center. So vehicles these days are outrageously expensive. If you want something new, you're probably going to need to finance or opt for a lease payment. Now everyone's burn rate, which means how much money you spend day to day or month to month, always exceeds their passive income. That's why we work. When your passive income is greater than your burn rate, well, you don't need to work, right? But for most of us, it takes us a lifetime to get to that point. Throw in children, education costs, maybe a cottage, another vehicle, hey, we never get off that hamster wheel, and most of us will create more financial problems by purchasing bigger and better things along the way. And that's what makes it so difficult. Every time you leave your home or pick up your phone, the social media storm will attack your psyche and make you believe the lives of the 1% are so much better than the lives of the rest of us 99% percenters. Social media flaunts wealth, whether it's real or not, and it turns into a constant daily reminder of not what you've achieved, but rather what you haven't. Basically, it's outlining what we're all lacking in life. Okay, I'm not saying that you shouldn't want nice things. We all want to better our lives. That's human nature. And I'm not saying pursuing wealth makes you greedy or selfish. Actually, when you are greedy or selfish, wealth building is actually much, much harder. But what I am saying is, know your situation, know what you can safely do to extend your debt load to improve your life and have a plan to deal with it. Debt is not a bad thing. In fact, a lot of wealthy people use debt to create more wealth over time. The secret is to have a plan that is flexible and that can pivot when unexpected things happen. You want a plan that allows for all debt to be dissolved by the time you want to stop working. So let me give you an example. If you have a mortgage on your home, you want to have your amortization match the year you plan to retire. If you're 40 years old and you want to have the ability to stop working at 60, then that mortgage must have an amortization of 20 years. And if you refinance along the way, you can't pull that amortization back. You've got to keep it moving forward. And if that means the payment is a little bit higher, well, you got to deal with that so that you can be debt free at retirement. Same thing with investment properties or a cottage. The mortgages must align with your retirement year and never be extended past it. This is going to give you economic security. And why do you want economic security? Well, economic security boils down to a number, an asset base sufficient to fund your lifestyle when you can't or don't want to work anymore. No one wants the stress of getting to the end of their working life and being in a position where they can't afford their lifestyle. So, what's the answer? Well, you all know what it is. You have to earn money by working hard, save some money along the way, maybe invest it into assets that will appreciate over time, and basically maximize your income, minimize your spending, and invest wisely. That's how to create economic security. Health is the product of a life well lived through hard work, frugality, and more good choices than bad ones. Now, I know you're all trying to make the right decisions in your life and you all want to build great careers doing something you like and you want to provide for your family. But sometimes life has other plans and opportunities get given to someone else or you have to take the fall for someone that has clearly been malicious with their intent. Being treated unfairly in a way that impacts your income, your lifestyle, or family welfare is one of the most upsetting experiences that we all face. This can create huge financial stress, perhaps at a time in your life where it's completely unexpected and knocks you off your game. Living through an injustice no matter what it is, angers us, and often settles in our hearts as resentment. The problem is when we resent others because of an injustice, we cannot help but feel anger, sadness, and disappointment that tends to strengthen rather than fade over time. Our upset is often re-triggered every time we think about it, which can even lead to ruminating and severe depression. Money problems, economic setbacks, job loss, and investment failures, well, they're all a fact of life. I've had this happen to me too. The problem is, the longer you get to live, the more opportunity there is for something to hit you and impact your life in a major way. You gotta realize that the only thing we have complete and utter control over is our reaction to it. We can choose to be positive or we can choose to be negative. Letting go of resentment is about forgiveness, and that doesn't mean to forgive yourself you are condoning the behavior of someone else. Forgiveness is about releasing yourself from that self-destructive and painful resentment. It's gotta be a gift to you, for you to drop the shame so you can move on. You are not forgiving the person who hurts you. You are instead setting it aside so you can live your life again. One is worthy of a life free of resentment, whether or not the person, the institution, or the situation you resent is worthy of your forgiveness. Now, okay, I know that's easier said than done, but do try to forgive. Maybe even forget and maybe even move on. Sometimes you may need to move to a totally different area to live and work to ensure you don't get triggered by old memories that make you miserable. I had to do this myself. Every time I drove by a familiar area, I went into a store or saw someone familiar, it triggered my anxiety, my stress, and my sadness. Not until I totally removed myself from that environment did I start to get better. So much so, I actually flourished, and you can too. We all need to start over and move past the negative sometimes. Staying put and suffering just prolongs things and makes it that much longer for you to wait until you're really happy again. You are the only one that can change and improve your life. No one else can do this for you. To create a happy life and reduce that financial stress, we must try to always be lowering our debt load. Each incremental improvement you make to your lifestyle definitely builds your wealth. But be careful that it doesn't make the other aspects of your life seem a little shabby, forcing you to go into more debt to upgrade even more. You eventually want to get off that hamster wheel, right? And stop being a slave to your debt. I know we all live in a world of excess and we're all constantly bombarded with images of people being happier with more stuff, but it's truly a false narrative. Try not to get sucked into it. Young people should be motivated by money, but as a means to an end, they should be focused on getting to a certain level of economic security. Beyond that, well, it becomes personal. More money doesn't mean more happiness. More material things doesn't mean more happiness. Your goal should be to create a life well lived, sharing it with the people you love, allowing yourself to age with financial security, with dignity, and the ability to always choose what's right for you. Thanks for listening in today. I'm Christine Ibbitson. If you have a money question that you would like answered, please send me an email through my website at askthemoneylady.ca. Join me next time when we'll talk about more money questions that always matter to Canadians. (upbeat music) (upbeat music)