Post Holidays

Starting in 2005, a British Psychologist, Cliff Arnall, believed that he calculated the most depressing day of the year.

He calls this Blue Monday and it occurs in mid to late January each year.  http://www.nydailynews.com/news/blue-monday-saddest-day-year-find-silver-lining-article-1.1007082

Arnall calculates this date on weather conditions, debt level (the difference between debt accumulated and our ability to pay), time since Christmas, time since failing our new year’s resolutions, low motivational levels and feeling of a need to take action Continue reading →

A Certified Financial Social Work Counselor’s (CFSW) Thoughts on Money

1.  How do you define the term, “Living within your means?”
First, you need to make sure you are spending less per month than you earn. Secondly, you need to insure that you are saving money for retirement and have at least a 6-month emergency fund.

2.  What is the difference of “living within your means” and “living below your means”?
I think of living below your means as saving a substantial amount of money… beyond the 6 month emergency fund, retirement, and any other basic savings necessities. Continue reading →

The Wealthy Could Even Benefit from Financial Counseling

My wife and I recently went to the Biltmore Estate.  In case you are not familiar, it is the largest privately owned house in the United States at over 175,000 square feet.

I found it amazing that the Vanderbilts, who are an incredibly wealthy family who built the estate, were unable to afford to maintain their estate during the Depression.  In order to raise funds, they opened their house for tours.  In 1956, the family relocated and turned the house into a museum that charged for admission, presumably because the maintenance cost was too high.

As I learned more about this house, I thought of my past post about living within your means.

It looks like no matter who you are, you have to be careful with your finances and live within your means.

Living Within Your Means

Keeping up with the Jones’, go big or go home, and livin’ large are all mantras of our society.  These mantras may very well sound appealing.  However, they seem to cause a great deal of pain for many.

In my office, I see people who are spending much more money than they are earning.  After the credit cards are maxed and the second or third mortgage has been taken out, people often find there is no place to turn and they are quite unhappy.

What you own is now owning you, as the old saying goes.  It is unfortunate how I see people who work excessive amounts of overtime just make the minimum payments on their credit cards and other debts.  When this happens, the excessive amount of work leaves little time to spend with family.  It often results in arguments with their partner regarding spending habits and sacrifices that may need to be made to pay for the material possessions. Sadly, when people buy these material things in hopes of improving their lives, it often causes the people so much mental anguish and long working hours that they cannot enjoy the possessions that they have.

Prevention is key.  What are you and your partner’s philosophies on money?  Do you have a budget?  Do you have a good understanding between wants and needs?  It is important to know the household income and the amount of money it takes to live for one month (utilities, rent/mortgage, food, car payment, etc.).  Once your have this amount figured, it is important to decide what you will do with the remainder of the money.  Remember to save for retirement too.  It is recommended that you see a financial advisor for detailed help in this area. Below are general spending guidelines:

Housing (rent or mortgage payment, utilities, repairs): Up to 35%

Food: Up to 25%

Transportation (car payments, mass transit, gas/oil, maintenance, insurance): Under 12%

Clothing: Under 10%

Medical (dental, prescriptions, health insurance, over the counter drugs): Up to 8%

Debt (school loans, credit cards, bank loans, etc.): Under 15%

Entertainment (movies, eating out, books, etc.): Under 5%

Emergency Fund: Minimum of 1%

Savings and Investments: At least 10%

Source: Reeta Wolfsohn, CMSW, 2004-2010  Center for Financial Social Work, Inc.  800.707.1002 www.financialsocialwork.com

 

When is financial social work counseling helpful?

  • The couple is not able to agree on a philosophy on money
  • The couple does not agree on what is a want vs. a need
  • A person feels that he or she has a poor or “complicated” relationship with money
  • There is a concern that there is too much emphasis placed on material possessions

Why Pay for Health Care?

Money is a sensitive subject for most. I can’t blame anyone for wanting to save money or cringing when they have to spend money on health care. I will never forget when I worked at Wal-Mart while in school and seeing people get very angry when they thought they were charged one or two dollars more then they should have.

I think there is something that makes us think we should not have to spend money on our own health care or it should be very cheap. Where does this belief come from? I don’t know. It would be great if it were true. However, it is not free or even cheap in this country. I wish it were.

When the average person pays $1000 to fix their car, they normally don’t like it, but go ahead and do it because they need it to be fixed. After spending that money, they see the value in it and go on. Ironically, when a client spends just a fraction of this sum of money on health care, such as coming to counseling (Which most of my clients don’t spend any ways near $1000.) or going to a doctor, they don’t want to do it, complain, avoid it, try to get out of paying and so on.

What is wrong with this picture of people not seeing health care, such as counseling, as valuable as something like getting their car fixed? The car will last a few more years at best. When a person spends money on their own health, such as counseling, that will often last many years and often change their life for the long term. It is very possible that counseling will also benefit family, friends, and others.

Ask yourself if your mental health is worth a few hundred dollars…I know your car is likely worth many times more to you.