The Color of Money Book Club: 'The Path to Happiness and Wealth'
with Michelle Singletary, Post Business Columnist
Wednesday, Jan. 29, 2002; 1 p.m. ET
Do you need a financial attitude adjustment?
Then I hope you've had a chance to read this month's selection for the Color of Money Book Club, "The Path to Happiness and Wealth:
How to Enjoy Money and Life at the Same Time" by Steve Rhode.
If 2003 is the year that you resolve to get your financial life in order,
join Michelle Singletary and author Steve Rhode to talk about how to accomplish that goal. Talk is cheap and if you want financial peace in our life you will have to figure out what's been stopping you so far.
Ultimately, the path to happiness and wealth begins by finding a balance
between what you make and what you spend. "Financial success is measured more by your state of mind and internal
prosperity than money in the bank," Rhode writes. "Unless you can find
peace with the money you have right now, more trailing zeros in the bank
will not help."
The transcript follows. Editor's Note: Washingtonpost.com moderators retain editorial control over Live Online discussions and choose the most relevant questions for guests and hosts; guests and hosts can decline to answer questions.
Michelle Singletary:
Welcome. I know it's hard to talk about anything other than the President and Iraq but a big part of what is going on in this country is people struggling with debt. As the economy and stock market continue to take us on a see-saw ride what plans to you have to get your financial life in order? Please share your concerns or ask any questions you have about your money troubles. Let's get going.
Michelle Singletary:
How difficult was it for you to write about your having to file for bankruptcy? What do you think of the rise in bankruptcies now? Many critics say it's because so many people are living beyond their means, do you agree with that sentiment?
Steve Rhode: It was very difficult. Money issues and failures are almost more intimate than anything else in life. There was nothing that made it easy to disclose my bankruptcy other than my philosophy that there is no sense wasting a perfectly good failure. From my pain many others have been helped and that’s a good thing.
I am not at all surprised by the bankruptcy rate. I would expect it to be higher than it is. The problem today is that creditors make it very hard for people to pay back their debts, for a number of reasons.
I agree that more people are living beyond their means but it is the result of unconscious spending and money medication. The critics are not seeing the entire picture.
Michelle Singletary:
In your book you talk about finding a financial balance? If you are overwhelmed with debt how do you begin to even start finding that balance or path to happiness and wealth?
Steve Rhode: And therein lies the problem. Here is no doubt that it is difficult to reengineer your life to find that balance. It’s not difficult because it is hard, it’s difficult because it’s your life and you are living it.
If you are truly committed to find a new path the first thing you need is an experienced guide who is not afraid to tell you the truth, knows the path and is prepared for the journey.
The most difficult hurdle is adjusting your life to fit within your income.
Michelle Singletary:
Here's a question from a reader who e-mailed me. Can you help her?
Los Angeles Reader:
Hello - I love you column and your all too infrequent chats! I've been wanting to send a question to your chat, and somehow missed the last one. Perhaps you can answer anyway, and feel free to use this in a future column/chat.
My husband and I make abt. $150,000 a year combined. After years of spend spend spend, we've finally grown up and decided to be more responsible. (I've used your column a lot!) We have very little (a couple of thousand) in savings, but contribute a lot to our 403b. We owe around $7000 in credit card debt, and are paying off our new car ($20,000.) I desparately want to buy a house when our lease is up in October (we're paying $1300/mo for rent, which sadly isn't much for Los Angeles, where we live.) My question is, should we put concentrate on paying off our debt, or save money for a down payment? I know there are a lot of mortgages that don't require a high down payment, but I also know the more you can put down the better. Any suggestions are appreciated!
Steve Rhode: You should not have to sacrifice one goal for the other. It’s about balance. It concerns me that there is not enough savings to be safe. It might be better for you to cut back on the investing right now to build a safety net of liquid savings. Otherwise, you will have to turn to expensive credit or an investment hardship withdrawal to deal with the unexpected.
I would use half of the available money each month to pay down the debt and the other half to save for the down payment. You can do both.
Alexandria :
Creditors make it hard for people to pay back their debts? What do you mean by that?
Steve Rhode:
Creditors are large organization of policies and procedures. The SOP (standard operating procedure) books can choke a horse. Here at Myvesta.org, our biggest battle on a daily basis is to persuade creditors to treat people as individuals and think outside of the box.
Where the rubber meets the road, the clerks on the frontlines, don’t have the right tools in place to make allowances that we are each unique people in unique situations.
Even when presented with realistic and sustainable proposals to allow someone to repay their debt, many clerks and supervisors at creditors don’t know how to treat people who can’t make their minimum payment. I’ve actually had a creditor tell me that someone who could afford $202 per month should file bankruptcy because their computer system would not accept anything less than $211 per month.
It is simply harder to do the right thing and fight for yourself than it is to put the square peg in the square hole and go with the flow. I fight for people because everyone deserves to be heard and treated with compassion.
Arlington, VA:
I was speaking to a member of our County Board about affordable housing, and s/he said the problem is that people don't think they can own a home. This member says that there are programs to help with mortgages for anyone if they really want to build a home, and that just increasing rental housing & subsidies are not the solution. That's great if you're trying to push poor people out of Arlington. However, doesn't the rise in personal bankruptcies & mortgage loan defaults cut against such views?
Steve Rhode: I worry about people who get into their first house using these low down programs. Many young couples are not prepared to deal with all of the unexpected costs of home ownership and squeezed into the home with the lowest possible down payment. Typically, that means there is not a lot of money left.
dc:
Steve, what can a person really do about finances?
So much is beyond our control--war, health premiums going up, gas prices up. Stuff like that.
Steve Rhode: Excellent question!!!!!
We can only control that stuff we control. It is entirely possible that you could live your entire life as the best money steward possible and be completely wiped out.
Life is simply unpredictable. Your next breath might be your last. I don’t want to freak you out but the reality is that, no matter what you might think, life is always almost out of control.
The best we can do is to realize that the things we have in life today, might no be in our lives tomorrow. I see people get deeper and deeper in trouble by expecting that today predicts tomorrow. It doesn’t. They insist on hanging onto all of the stuff they have, material and emotional, and expect to be able to carry it with them.
So, if you live in a big house today, you might not in the future. All the things you suggested might force you to have to cut back. Just because you don’t live in the big house anymore does not define who you are or talk about your value and worth.
The question is not what can we do about our finances. The real question is ho can we live a happy life without letting our finances define who we are.
Michelle Singletary:
How should people define financial success?
Steve Rhode: Financial Success – The ability to have enough money to live a happy life, within your means, and still be able to dream.
For me financial success would be the ability to travel more and work with more people across the world to help them as a guide to overcome their money issues while taking care of my obligations back home.
Alexandria, Va. :
Love this topic! I'm currently in my early 50's, expect to take early retirement from the U.S. gov. fairly soon, will have a pension of around $40k. I have a substantial portfolio (over $800k), no debts except mortgage, less than $100k, 11 years remaining. My worries are how to figure out how much I can spend each year without outliving my funds, but since I don't have any dependents, I'm not interested in dying with a lot of money unused either. Thoughts? Michelle Singletary:
Can you adopt me? :)
Steve Rhode: I would suggest working with a financial planner to do the calculations. Just remember that life is very unpredictable and the best plan will never mirror real life. I’ve worked with people who refused to spend any retirement money because they wanted to save it all, but they lost out on being able to enjoy life. Just having money isn’t any good unless you get to spread it around a bit.
Do your best to plan, but get out there and enjoy life. It’s a big world waiting for you now and in the future.
Michelle Singletary:
Question from another reader:
I love your column, read it regularly and it helps me all the time. However, I am irritated that the underlying assumption of so much of what I read regarding finances around DC is for those who actually have room to trim their budgets. Could you please speak to the many of us who live close to the bone- with housing costs often taking at least one pay check of two in a month. It's really really hard to save. How do you save when you aren't making six figures, and you do not have electronic garages, dinners out to eliminate, etc. It is mighty hard, as you know. And things get tighter and tighter. Metro is going up, health care is going up, everything is going up but salaries! I sometimes wonder how many ways I can slice a penny.
Steve Rhode: I am always amazed by how thin Michelle can slice a penny. She put the Fru in frugal.
At some point you are absolutely right, if you work your fingers to the bone, all you get are bony fingers.
You will need to reevaluate if it is worth it to you to remain in the DC area. Maybe moving to a lower cost of living area where your skills are desired is in the cards for you. Maybe you need to develop new skills or employer value to increase your income.
At the end of the day if you don’t make any changes, life will squeeze you out. Take control while you still can. Open the box and look elsewhere for new opportunities.
Midwest:
Steve,
Your book sounds wonderful. I have a question. I have no credit card debt, a sizeable savings acct. and I do a good job of living within my means. The problem--I dont earn enough for my age. It makes me feel like a looser and I get jealous of others that aren't as smart or capable that are making much more. I am looking for a position that pays more (and not just because I want to spend more $). I can not get past feeling like I am wasting my talent and life plus not making much. Please comment.
Steve Rhode: Life is unfair.
If you don’t like the current situation, make something good happen for yourself. Look around for new opportunities and take responsibility for changing your environment.
You sound as if you are using money as a way to measure worth. Wrong measuring stick. If you are happy where you are, doing what you do, keep doing it.
People will always make more than the next person but making more money does not make you more happy.
There are greater riches in life than just the number of zeros in your account. Be proud of who you are. Life is a one-way trip. There are no do-overs.
Alexandria, VA:
I know what you mean about creditors making it tough to pay back debt. They also make is possible for people to get into too much debt. Yes, you need to have personal responsibility and not spend too much, but when CC companies are throwing credit cards at you, and you are having trouble making ends meet, it's too tempting.
I declared bankruptcy. Before I did so, I could qualify for a credit card in an instant, and often did, even though I had $30k in credit card debt and $35k in car loans. However, now that I'm 6 years past the BK, with no debt except for a mortgage, and an excellent income, and have restored my credit, I can't qualify for most credit card. Doesn't make much sense, does it?
Steve Rhode:
Why is it that we can drive a 2,000 pound vehicle down a paved road with nothing more than a painted line separating us but we can exercise control over our thoughts and actions to not collide?
Why is it that I own a sharp set of kitchen knives but I’ve never killed anyone?
Just because a creditor will make you an offer does not mean that you can afford it or that it is a good idea for you to accept their offer. It is only what it is, an offer to extend you credit. If people sent you offers to jump off a cliff and you did it, what would people think of you?
As long as we continue to blame others for our actions we are always the victim, never in control of our own lives. Take control over your life.
Michelle Singletary:
I so often get letters from people who are really just getting by. They've cut so much they are bleeding. You suggested to one reader that perhaps she should move to improve her economic position. Is that always possible? What if it isn't? How do you begin to help someone who is cutting every extra expense and still can find money to save or invest?
Steve Rhode: Once you don’t make enough to survive where you are right now, you lose control over your life. Once you don’t meet your financial obligations, your creditors will begin to exert control over your life.
It is very possible that by not looking forward to increasing income or reducing expenses you can become homeless or a shut-in.
One woman I know is still in the denial phase of her money crisis and lives with the heat set as low as possible, with only one light one, eating as little as she can. Her husband died a few months ago and her income went from six-figure to nothing overnight. She is not emotionally ready to let go of her old life.
Her creditors are waiting at the door to do all sorts of things to her financial life. She could certainly improve her situation by getting a job, moving and considering new opportunities. As long as she is stuck in her expectations of what life owes her or her old path, her life is a train wreck in progress.
It’s hard to stand by while this happens but sometimes people hit bottom at different points.
Midwest:
I just want to second Steve's notion that
geography can be a major contributor to
financial success. I grew up in DC, but
now live in a large metro area in the
Midwest. It offers many of the same
cultural, shopping, lifestyle opportunities
for much less money and aggravation (
commute times, etc.). I bought my first
house six years ago at age 25, when I
was making 32K. Obviously, there are
other factors - if you are close to family,
friends, or work for the govt. it may be too
much for you to give up. But if daily life is a
struggle it really is something to consider.
Also, I have found there is much less
pressure in the Midwest vis-a-vis keeping
up with the Joneses financially. Thanks
for your advice - the column and chats are
invaluable.
Steve Rhode: Amen.
Alexandria, VA:
If you accepted responsibility for your own spending, you never would have declared bankruptcy.
Steve Rhode: Excellent point. When I was going through my troubles I was inexperienced at how to solve the very complicated mess. I wound up homeless, my wife and young daughter moved back in with my parents, I sold everything to repayment what I could and without an income. I went to credit counseling and they said they could not help. I asked for advice from financial experts of all types, they all suggested bankruptcy. There was no organization such as Myvesta.org in existence at the time to help me. Since then I created an organization that can help people find the path in the face of a system that pushes people to bankruptcy.
I did my best to repay my creditors after bankruptcy. Interestingly, many sent back my payments because they did not know how to apply them in their computer system.
Bethesda, Md:
The comment about the real costs of owning a home was right 'on the money'-- it's not just the mortgage, folks, it's also the heat pump, the plumbing, the roof, the kitchen appliances, and so on, and so forth...
Steve Rhode: Don't forget the shelf paper!
Alexandria, VA:
Even though my husband and I make enough to live comfortably in this area, we've decided we have to work too hard for our standard of living. What's the point of having a nice house if you're never home?
So we're chucking it in and moving overseas to my husband's country. Salaries cut in half, but we'll be working 35 hour weeks, with 6 weeks vacation. Sure, our house will be small (most houses are there) and the sun doesn't shine all that often, but home by 5:30, and never working on the weekends? Can't beat that.
Steve Rhode: Sounds like you found your path to happiness and wealth. I hope that rather than running from something you are running towards a new opportunity that will bring you the happiness and peace you are looking for.
Michelle Singletary:
I find the conversation about how much one makes very interesting. As hard as I try I too find myself wondering if I should be making more. We all look around and see so many people that do or at least appear to have so much. How to you combat that feeling of not having enough? Personally, I pray about it a lot. I talk to my husband (who by the way has one of the best attitudes I've ever seen about life, money, wealth and happiness. I thank God I found him because he helps keep be balance). Sorry. Had to give my pookey his due. Anyway, aren't the feelings I'm talking about the reason why so many people live beyond their means, get into credit card trouble and end up in a house they have to work like a dog to pay for? Is there a particular chapter or section in your book that would help people sort this out?
Steve Rhode: People with more stuff usually have more debt. Big homes do not equal big bank accounts. Potomac is full of people living on the edge.
I’d read chapter three “Take a lap on the gerbil wheel of debt” and chapter 4 “Why money doesn’t make you happy.”
Michelle Singletary:
Can you talk a little bit more about the pre-purchase questions you developed and discuss in your book? What are the questions people should ask and why. By the way I do spend a lot of time talking to myself when I go shopping. Customers standing around me think I'm nuts.
Steve Rhode: I know we are running out of time but on page 125 in the book, "The Path to Happiness and Wealth" you will find the questions you should ask yourself before you make a purchase. They will help you to keep your money under control.
VA:
I agree with your earlier posts about taking responsibility for credit card debt. But I have to say that I did the Consumer Credit Counseling and my aunt took bankruptcy. She got credit immediately while it took me many many years to dig myself out of the hole and regain some credit standing. It was quite galling to say the least and I received no credit (no pun intended) for staying put and paying off my debt.
Steve Rhode: Yes, that’s true. The system rewards those who file bankruptcy but what about your self-worth and self-esteem? What are they worth to you?
It is my experience that bad debt happens to good people.
Washington:
My husband of 4 years moved out of the
house this weekend to "think things over."
I'm not sure where things are going - are
there things I should be doing right now
to protect myself in case this really is it?
Steve Rhode: Split the finances. Remember, that if it winds up in divorce, you divorce your husband and not your creditors. Joint debts will remain joint debts and you will still be responsible even if he does not pay his share.
Go to MyvestaStore.org and look for the downloadable publication “How to make a clean break at divorce.”
Good luck.
Midwest Again:
Michelle,
I am the clickster that feels like a bum sometimes because I make less than I think I should be at 30.
So, so, so classy of you to admit that you get a little of the green bug sometimes because others seem to have so much and you want more. I was very impressed by what you wrote. Thanks for the honesty.
Steve Rhode: Yes, Michelle is a classy lady who opens her life up for her readers to learn from her experiences. I think we are all lucky to have her in our lives and to give us little doses of “Big Mamma” wisdom on a weekly basis.
Just remember to not define yourself by what you make but by who you are.
Michelle Singletary:
Ah, you guys say the nicest things about me. But as Steve said my personal goal is to use my financial experiences--good and bad--to help people see that they can achieve financial peace. Folks this stuff is hard. There are a lot of people making a lot of money trying to find ways to separate you from your money. But with the right attitude and support I believe as Steve wrote in his book that you can discover your own path to happiness and wealth (which is not necessarily defined as having a big house and car). However, for some it's going to take work and you will have to get rid of bad money habits. Even in this shaky economy you can find ways to enjoy life and the money you have. If you haven't done it already pick up Steve's book. It's an easy read and one that will have you nodding your head all the way thu. Today, I'm posting the names of folks who won a free copy of Steve's book. And I'm just a week or two away from announcing next month's book club selection. It's one about love and money (for regulars you know this is one of my favorite topics. See ya and come back in two weeks!
Michelle Singletary:
That wraps up today's show. Thanks to everyone who joined the
discussion.
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Here is a list of January's Color of Money Book Club winners:
John Bell,
Scottsdale, AZ
Betty Carhill,
Idaho Falls, ID
Cathy Cressy,
Columbus, OH
Cerasela Cristei,
Vienna, VA
Peggy Ernst,
Gaithersburg, MD
Carolyn Flemon,
Jonesboro, AR
Curtis Glover,
Washington, DC
Mildred Jackson,
Buffalo, NY
Shira Kash,
Atlanta, GA
Betsy Kephart,
Huntsville, AL
Laura Klemm,
Somers, WI
Sky Marsh,
Portland, OR
Patricia Mello,
Somerset, MA
Robin Miloslavich,
Stockton, CA
Christina Pearson,
Penfield, NY
Holly Shaw,
Washington DC
D. L. Sorkin,
Agoura Hills, CA
Wendy Stoke,
Alexandria, VA
Vilma Veres,
Belleville, IL
James Waddel,
Laurel, DE
Emily Ward,
North Plam Beach, Fla.
Ralph Welsh,
Bowie, MD
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