When You're In Too Deep

Recently on Facebook a friend of mine made a somewhat despondent post about their financial situation and how it felt they were in a hole so deep there was nothing they could ever do to get out of it. I reached out to ask if they’d been reading the blog to which they responded, “I’m nowhere near the financial space to begin taking advantage of the stuff you write about.” I wondered if that was true and started considering the fact that while I write a lot about maximizing situations like having access to a 401k I haven’t spent as much time writing about what to do in a financial situation with little means and the feeling that your situation is hopeless. Today we’re going to change that.

The most powerful thing I ever read on the internet

A long time ago a friend of mine introduced me to a website his brother had been working on called “Reddit,” a sort of forum-based posting site where you could talk about pretty much anything while users helped to filter the quality of content by voting on it favorably or unfavorably. A long-time user of forums from my professional gaming days and an avid social media enthusiast during the dawn of Myspace and Facebook I was hooked pretty much immediately. Eventually I curated my subreddit list to feature the topics that were nearest and dearest to my heart including the very excellent r/PersonalFinance group where Redditors share perspective on personal finance with the goal of better living through taking care of themselves financially. (If you’re not visiting Reddit, I recommend at least checking out r/PF).

One of the most common topics in the personal finance subreddit was a post that went something like, “I’m in situation Y, what do I do?” where Y was almost always, “too much debt, not enough income.” The solution is almost always the same (we’ll get to it in a moment), and I was happy to review these posts for perspective and to spot check myself to make sure I was on my own path correctly for a long time. Occasionally I’d offer my own perspective. Then came the post that changed everything.

“My mom is 65, in bad health, and has no retirement savings. What can she do?”

The way Reddit works is that someone makes a post, users comment on that post, and other users vote answers up and down depending on their quality. While it’s not a perfect system, generally you’ll find better answers float to the top as users select the higher quality posts for upvoting and filter lower quality posts to the bottom of the stack by downvoting. I was curious to see what the answer was going to be on such a tough question and clicked on the comments thread. In all my life I’ll never forget this answer, voted to the top by hundreds of users:

“Your mother should cut her expenses as much as she possibly can, plan to work as long as she is physically able to do so, and prepare to live out her life in poverty.”

My heart broke. The best advice a group of financially savvy internet users could come up with for that poor woman was, “Your life is going to be horrible now.” I was already on the way to preventing that for myself and my family, but it doubled my resolve to work harder towards financial independence to never be in a situation where anyone I cared about had one option for handling their financial situation: prepare to live your life in poverty.

The one thing that matters no matter what

“Bill, what the hell man?” Some of you are thinking, “I came here for advice on paying off this credit card and now I feel like I’m watching a Werner Herzog film.” I promise we’ll end on a brighter note but I bring up the story of the saddest thing I’ve ever read on the internet to punctuate a point: money isn’t a laughing matter. It’s the leading cause of divorce, it’s a significant cause of stress for Americans which can lead to hypertension and other health disorders which literally end your life early, and when you start caring about your money matters if you want to harness the most powerful force in the universe. We can spend years thinking, “I don’t sweat my finances,” while spending more than we make, not saving for retirement because there’ll be time for that “later,” after buying a house, after paying for a new car, after paying for the kids’ colleges, after buying a boat, after, after, after until years of “I don’t have to worry about that,” turns into decades and finally turns into “Prepare to live in poverty.”

To prevent that from happening, to help you dig out of whatever situation you find yourself in now, I’m going to let you in on a little secret: there’s only one thing you have to do before you can tackle all of your money problems. Just one thing! Before you can do anything about your debt, your lack of financial standing, or the lack of money you struggle with on a daily basis you just have to do this one, simple thing: accept that your situation is changeable and that you’re the person who is capable of changing it.

It’s so simple and yet so needlessly complex because it’s a really difficult thing to do for many folks paralyzed by the fear of their debts, embarrassed by the poor financial decisions they’ve made, and scared that maybe they’ve made so many steps in the wrong decision that there’s nothing they can do to ever go back the other way. When you embrace the notion that your situation is not unique but instead something that is changeable and that the person who has the power to change that situation is you, then you can start to do something about it.

It really, truly, is that simple: if you believe you can make a difference in your financial situation, you can.

The Two Step Plan to Your Financial Future

I talk about the 10 Step Plan to Your Financial Future an awful lot because they’re so important but if you haven’t got the means to go through all of those steps here are the two steps you need to secure your financial house:

·         Cut expenses

·         Increase income

That’s it. Do one or both of those things and you will magically have more money than you used to. How you cut your expenses means knowing what expenses you have which is Step 1 of the 10 Step plan. You’ll need the most powerful financial tool in the world (don’t worry, it’s free!). A person who can’t cut some number of expenses from their budget is the exception to the rule which means even if you’re thinking, “I can’t spend less than I do,” you’re just not the exception. So figure out where you CAN cut and get honest with yourself (remember: your situation can be changed, and you’re the person who can change it).

Once you’ve cut expenses it’s time to increase income. How?

There’s a reason pride is a deadly sin

When I was in college I was a struggling writer. I wasn’t struggling to write but supporting myself? That was easier said than done. I didn’t have the money to make ends meet (I’ve talked about doing “ramen math” before), and I needed help. So like any self-respecting adult I called my mom. “Bill, you need a job.”

End of advice from mom. And she was absolutely right.

Hat in hand I messaged my friend Reggie to ask if he could help me find a job on quick notice. He said his place of employment was always hiring, they paid weekly (a good thing; I needed cash fast!), and he could probably get me an interview the next day. Sure enough he delivered and I started work 72 hours after our chat. One challenge: I was a burger flipper at an A&W restaurant in a gas station in rural Iowa.

There’s a reason pride is a cardinal sin: it’s stupid bullshit that gets in the way of being the person you could be. I felt like I had to swallow my pride to set aside my view of myself as a “writer” while attending an expensive liberal arts school only to work in the fast food industry to make a living. The tragedy of that line of thinking was that it said a lot more about me than my situation; here I was in need with a friend who was happy to hook me up and I was embarrassed about the job. Present day Bill is still embarrassed: embarrassed at how I felt back then.

The reality is when you’re in a hole or a bad situation there ain’t nothing but work gonna get you out. Need money? Then you’re not too proud to take the (legal) jobs that come your way to make ends meet. And you’re definitely not too good to go out and look for them, doesn’t matter the size of the job. I worked that A&W gig for two years and actually enjoyed the experience. I learned a lot and left only when I had secured a better opportunity for myself. The most important lesson I learned? When you need money you work what’s available; set aside your standards until you have enough income to be able to afford them.

Side hustles

I’ve been an entrepreneur as long as I can remember. In elementary school I used to sell rubber insects I made with a toy oven to my schoolmates until the teachers banned them. Then I turned to sports cards, and when they banned those pencils with athletic logos on them. When those were banned my brother and I cornered the market on pogs until those too were banned. Whatever it was, we always had a side hustle to make extra money. When you’re financially struggling? You also need a side hustle.

A good side hustle is anything you can do for a rate of pay you’re comfortable with in the time you have outside of work. Perhaps it’s photography on the side. Maybe you start a service cleaning gutters (something no homeowner wants to do, but needs to do annually), or use a web service like TaskRabbit or Mechanical Turk. See what the “help needed” ads look like on Craig’s List and then start offering those services.

You hustle to make your money so you can pay off your debts, get your emergency fund squared away, and sort out your financial house. Eventually you’ll reach a point where that credit card you let get out of control is managed and you can decide if you need the side hustle or not. Some people turn their side hustles into full-time jobs and switch careers. There are benefits to your side hustle beyond “working more,” and if you’re planning your finances properly your side hustle can be a short-term solution to a short-term problem or go as long as it makes you happy.

Downsize

One of the more famous pieces of advice on the personal finance subreddit is downsizing your things when you’re working on building up your financial situation. This is great advice for two reasons: first you wind up with some cash from selling items around the house you don’t need which helps get you on your feet and second by looking at how much stuff you have that you don’t need you realize you’re living the deadly effects of lifestyle creep. Absolutely utilize this option while you’re figuring out long-term plans; give the house a once over for what you have that you don’t need, want, or use anymore, photograph it, and post it for sale. It doesn’t matter how you sell it just that you get it out there. Craig’s List, Ebay, a garage sale, whatever it takes: get that money.

Hire yourself

When I called my mom for her advice on my financial situation she gave me the very matter of fact perspective that I needed to get a job. Blunt, but 100% perfect advice. I should have known because she did a lot to instill strong work ethics in her kids. My favorite story from my youth finds her freshly arrived in Washington D.C., a giant megalopolis compared to the tiny farm town in Illinois that she had come from. She found a job working nights at a hotel and immediately set upon trying to find a better employer. She did almost immediately: herself.

Working for herself wasn’t enough to quit her hotel job. Instead she hired herself to work part-time looking for better jobs. Every night she went to work at the hotel and every morning when she got off she did the rounds applying, interviewing, and seeking out new employment. Then she slept, woke up, and did it again. Was it the glamorous life she thought she’d find in the big city? Far from it, but she was getting it done and opening herself up to opportunities down the road that would allow her to lead the life she wanted. Eventually she landed a great sales gig, married a nice man, and had the best kids ever so it all worked out.

The moral of the story? If you’re not happy with your financial situation you have a new boss: you. You get paid when you close a sale, and you’re selling yourself. Hit up every jobs site, every Craig’s List ad, and start finding out who needs your skills and how much they’re willing to pay. It doesn’t matter whether you’re looking for a second or third job, or trying to find a career, or simply looking to consolidate a bunch of part-time jobs into a single job that pays as much. Even when you do have a full-time job or if you’re happy with the one you have right now it’s still worth applying for jobs throughout the year. It lets you keep an eye on the market as to what’s available, what employers who are looking for people in your position want, and oftentimes you’ll be surprised to find your employer may not be offering you the most competitive salary and benefits package. After all, they don’t need to: you already work for them! Change that equation by putting yourself out there to determine if you have better opportunities elsewhere and live up to the demands of your new boss: you.

You’re gonna have to work for it

If you’re like my friend or millions of other Americans who are having trouble financially I feel your pain. I lived your pain. The way I got out of it was by accepting that it was possible to get out of the situation and that the only person who could get me out of the situation was me. All that’s left at that point is busting your ass to get it done. Doing that means work to make a better life for you and your loved ones.

What are you waiting for?

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